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3 Quick Points to Simplify FIRE
Financial freedom should be a goal you have
Some would say FIRE is fire. FIRE stands for Financial Independence, Retire Early. It is a movement dedicated to savings and investments to retire at an earlier than traditional age. The conventional retirement age is 65. With a FIRE approach, many individuals are looking to retire before that, such as 35 or 45, depending on their goals. The following 3 points will help to simplify FIRE further:
1. Percent of Income to Save and Invest
2. Variations of FIRE
3. FIRE Calculator
1. Percent of Income to Save and Invest
With a FIRE approach, one of the key goals is to get to a point where you can dedicate up to 70% of your income to savings and investments. Yes, that is a large amount, but it is achievable with a clear understanding of your income and expenses. It will likely not happen instantly, but it is something that you can make occur within a five-year period by working towards raising your income and lowering your expenses.
2. Variations of FIRE
The three main variations of FIRE are Fat FIRE, Lean FIRE, and Barista FIRE. Fat FIRE involves saving and investing more than the average person while still maintaining a lifestyle that allows you to do what you want. Lean FIRE involves living as minimalist as possible, which increases your possibility of dedicating 70% or more of your income towards savings and investments. Barista FIRE involves quitting your day job once you achieved your savings and investment goals but still maintain a part-time job to cover your key living expenses.
3. FIRE Calculator
I enjoy using free online resources. Money Under 30 has one of the best FIRE Calculators you can find. Once you navigate to the calculator, you will need to input items such as your age, income, expenses, investments, savings, and estimate retirement expenses to determine your FIRE Goal (the amount of money you should have to maintain your current standard of living at retirement) and your FIRE Age (the age where you can achieve your FIRE Goal and retire).
The FIRE movement may not be for everyone, but it is something you should consider if you are serious about retiring at an early age. Even if you do not want to retire at an early age, you should always work towards having more of your income go towards savings and investments than expenses. Avoid getting hit by lifestyle creep. You should still enjoy the things you wish to do but do so when reasonable. Let me know what you think about FIRE!
