The FIRE Movement was born out of the 1992 best-seller by Vicki Robin and Joe Dominguez, entitled Your Money or Your Life.
So, what is the FIRE Movement?
It’s a program devoted to extreme saving and investments that allows you to retire early if you so desire.
One of the key components is evaluating each dollar spent based on the number of hours it would take to earn that dollar.
The goal is to set aside enough money in an investment account to retire early by taking small withdrawals of 3-4% per month.
Along with monitoring your spending, another component is finding multiple income streams, passive if possible.
You can accomplish this with real estate, an online business, a blog, investing in other companies, or any other side hustle your mind can imagine.
When a person has a minimum of 25-30 times their yearly expenses, they can retire from their day job if they choose.
Millennials are the fastest-growing group of people embracing the FIRE movement.
Even though the principles of the movement work well for younger people, any group can benefit from the program’s components.
Here are a few takeaways from the FIRE Movement.
Determine How You Want to Retire
In the movement, there are three basic ways to retire.
One is Fat FIRE, for people who want to maintain a traditional standard of living in retirement. Retiring this way requires a higher salary now and an aggressive saving strategy.
Second is Lean FIRE, for people who want to create a more frugal and extreme way of living. Many Lean FIRE proponents live on as little as 25,000 dollars a year.
Third is Barista FIRE, for people who want to live somewhere between the two lifestyle choices above. To fund their lifestyle, they may choose to work part-time as well as take money from their investment account.
Deciding HOW and WHEN you want to retire is the first step in the planning process. These decisions will inform your saving strategy.
Who benefits from the FIRE movement?
Anyone who wants to achieve financial independence can benefit from the principles outlined in the FIRE movement.
Your goal may be something other than early retirement. Instead, you may want financial independence for different reasons, such as doing work you love instead of your current employment.
One outcome is to learn how to consume less while living better. So, no matter how old or young you are, you can benefit from these ideas.
A detailed plan for retirement and choosing the discipline to carry out the plan will serve you well in life. In addition, you may find that delayed gratification is an unexpected perk of immersing yourself in the FIRE movement.
Trusting in the process of long-term investing is one of the main aspects of this movement. You may have to work on some limiting beliefs in this area to achieve success. Long-term means you’re in it for the duration, even with the ups and downs of the market.
How does the FIRE Movement work?
The FIRE movement is a mindset people adopt to get off the never-ending treadmill of wanting more or trying to keep up with the Joneses.
The idea is to consume less of the world’s resources, live fully present in each moment of life, and enjoy this human experience without getting caught up in the habit of spending mindlessly.
Adopting this mindset can benefit you even if your overall goal isn’t to retire at 30 or 40. As you begin to think about your money and your life differently, you can make choices that will give you more financial freedom and may eventually lead to financial independence and early retirement.
Your focus determines your future.
When you change the focus of your money, it will change the outcome of your future.
To sum it all up, it really is your money and your life. You get to decide how to spend both. You can join the rat race and strive for the biggest, best, shiniest, and brightest or create a plan for financial independence.
Remember, the best thing money can buy is financial freedom.
P.S. I invite you to join my Spend on Purpose program, where we take a deep dive into where your money is going. From there, we’ll find your lukewarm spending habits and turn those into investing opportunities. You can set up a short call with me to get started now!
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