Have you ever heard of the FIRE movement? I first heard about it when I was working in Malaysia in the space of personal finance and Fintech. During that time, I had gotten to know more about personal finance bloggers such as Mr Stingy, Ringgit Oh Ringgit and Dividend Magic. It was through their work which I discovered the FIRE movement.
Financial Independence / Retire Early (FIRE)
Pretty cool abbreviation, huh? The FIRE movement advocates for a change in your lifestyle and habits when it relates to spending and managing your money. All-in-all for the goal of being able to retire early, or reach financial independence.
Financial independence here means that you are able to live year-in-year-out without having to actively earn more income. All your expenses are covered by passive income generated from your investments. In that sense, you do not have to work and can retire from any form of employment. You are ‘independent’ financially.
This sounds like the dream, and I do not believe that anyone would not want to achieve financial independence. As a financial goal, it is a pretty sweet one. But how do we attain FIRE 🔥?
How to achieve FIRE
Mr Money Mustache explains the whole method with convincing facts and flair in his famous article. On a concept level, essentially these are the steps you need to do:
- Maximise your savings, by:
- Minimising your expenses
- Increasing your income
- Investing your savings into pots that beats inflation
- Live a frugal lifestyle that can sustained by the recurring returns from your investments.
All the above steps are essential. However, the ones which has great impact, and the ones that you can action now is cutting your expenses and gradually training yourself to live frugally.
Many people quote the adage that, “less is more”. In this case, making yourself be comfortable by buying less, having less, and living with less will enable you to reach FIRE more quickly. FIRE is the ultimate goal here.
But what does this ultimate goal of FIRE really mean?
FIRE does not mean you stop working completely
And this is NOT unfortunate news. Reaching FIRE indeed does mean that you do not have to work for an employer anymore. It does mean that you do not have to actively look for income to ensure you have food on table for many years to come.
But, it means so much more.
By reaching FIRE, you arrive at total freedom. You now have the full financial freedom to spend time on what you are really passionate about. Eloquent as ever, Mr Money Mustache defines reaching FIRE as having,
“Complete freedom to be the best, most powerful, energetic, happiest and most generous version of You that you can possibly be.”
Mr Money Mustache, What Everybody Is Getting Wrong about FIRE
For a lot of people, it means to work on what they really love. It could be opening up a cafe in their neighbourhood. It could be living in a farm and working the fields together with their loved ones. It could be being a full time gamer streaming live-plays to their fellow gamers. It is the freedom to be whatever they want.
When you were a kid, did you have someone telling you,
“You can be whatever you want when you grow up.”
For most of us, that phrase gave us hope when we were small. For many of us, that phrase transformed into a lie when we first entered adulthood.
Maybe it’s time we gave that phrase a second chance. Maybe by aiming for FIRE, we really can be whatever we want in the future.
Don’t just dream. We must dream and do.
Peace,
Ruiz