All of us have, at some point or the other, dreamed about quitting our jobs and retiring early to pursue our passions. But the reality of having to finance our present and future (and in some cases even our past) is what prevents us from taking this beautiful leap towards financial freedom.
It’s a tough choice when you have to choose between our dreams and our financial security. And this exact dilemma among Millennials is what started the FIRE movement.
What is FIRE?
FIRE stands for ‘Financial Independence/Retire Early’. Started in the early 2000s, it is a movement which encourages people to retire early to live more fulfilling lives. The common age for retirement around the world is between 50 and 65 years. But the FIRE movement encourages people to retire in their mid 30s and 40s so they have an opportunity to catch up with their dreams and goals. Some people retire early to travel, others to pursue a passion, and some even to start a small business.
Who is FIRE meant for?
FIRE doesn’t discriminate. It is meant for those who have very demanding jobs and equally meant for those who see no real fulfillment in their career paths. At the root of it, it is meant for all of those who want to take time out of their lives to pursue their dreams and passions.
How to achieve FIRE?
This movement focuses on retiring early on the basis of financial independence. This does not mean you need to save up all the money you will ever need before you retire. To simplify it, financial independence is when you don’t make all your decisions based on your financial situation, but on your terms. You have the capability to do what you want and still live a financially stable life.
However, it’s easy to say the term ‘financial stability’, but it isn’t easy to attain financial stability if your income is not enough for your expenses.
Fun fact: If your net worth is 20 times your annual income then it means that you are financially independent and stable but if not then you need to make some sacrifices.
The major motive of the movement is to promote financial independence hence; if you wish to be a part of this movement then you need to:
A) Set a mindset to achieve your goals: Unless and until you figure out why you want to retire early and what it means to you to be financially independent (in actual numbers), you won’t be prepared to take the journey. A helpful tip is to start with what you want to do 15-20 years from now.
B) Cut back on expenses: You need to live a frugal life today and create funds for yourself. The simple motto of FIRE is to save today for a secure future tomorrow.
To get a better grasp of these concepts you can read more on subjects like effective wealth management and retirement planning.