Most American families have little or no money put away for their retirement.
This shocking statistic is one of the motivators behind the new FIRE movement that wants to move away from the traditional view of retiring at the age of sixty-five.
Millennials have started to embrace a new way of saving for your retirement at an age when you can fully enjoy it too.
If you are looking for a FIRE Movement guide that will help you on the road to financial independence, then read on. Our 7 FIRE movement tips will help you get started building the lifestyle of your dreams.
What is the FIRE Movement?
The F.I.R.E Movement stands for Financial Independence, Retire Early. It is a movement to encourage individuals who are unhappy with their current financial situation to save aggressively for their future.
It is a particular hit with the millennial and Gez Z generations, whose financial futures look much bleaker. But it is a strategy that can be applied by anybody who wants to change their future and live in financial freedom.
Many view financial independence as the opportunity to live your dream life, sipping cocktails on a beach or traveling worldwide. This could be a reality with FIRE, but more realistically, it simply means giving yourself a choice.
Financial independence means you don’t have to work if you don’t want to. You have the financial freedom to make other parts of your life a priority. For some, this could be traveling, whereas it could mean family or pursuing lifetime achievements for others.
Sounds good? Many would agree. But it takes some serious commitment and more than a few sacrifices to achieve it. The path is challenging, but for many, the opportunity to retire in their 30s-40s is worth the cost.
Even if the movement is not for you in its entirety, there are definitely some things it could teach us about how to make the most of your money and your future.
How to Get Started with a FIRE Movement
There are several different approaches that you could take to start your FIRE Movement. Not everyone has to have the same strategy to achieve success. You can choose the style that best suits your life.
LeanFIRE is a minimalist approach. You strip back all the unnecessary luxuries from your life, like a car, and focus on maximizing your savings this way. This style requires strict adherence to your life plan.
FatFIRE is the opposite of the LeanFIRE plan. You lean heavily into living a traditional lifestyle but focus on saving much more than the average person does for their retirement.
BaristaFIRE refers to those who have moved away from the traditional 9-5 model but remain employed, usually in a part-time job. This job is designed to keep their finances from dipping into their retirement funds.
CoastFIRE people have already had enough saved for their future and decided to keep a part-time job for additional funds or for the fulfillment it brings them.
- Start Early
One great thing about the FIRE movement is that it is focused on saving for your retirement, a topic that many of us choose to ignore for as long as they can.
Ideally, the early you start on your FIRE plan, the better. The more time you will have to save and the longer you will have to reap the benefits.
That’s not to say that you should give up if you are older. Saving for your retirement is important at any age.
Start dreaming about what the future could be like and then start a plan to make it a reality.
- Crush Your Debt
One of the FIRE movement’s key tenants is to have little to no debt, so getting rid of your debt first has to be a priority. Credit Card debt, in particular, needs to be paid off as soon as possible.
Move away from minimal payments and calculate the maximum amount of repayment you can make each month. Get it paid off as soon as you can to avoid the interest.
Minimum repayments are designed to stop you from paying late repayment fees, but they are not reducing your debt. Pay more now and get that debt down to zero. Short-term pain has long-term benefits.
- Start Saving
Once you are clear of your debt, it is time to save, and saving is a priority in the FIRE movement. If you want to retire early, you have to do two things: Save your money and invest it wisely.
Members of the FIRE movement look at saving well over 50% of their monthly income. It sounds painful, and it is, but you can start small. The aim is to move away from living paycheck to paycheck.
Start around 10-15% of your monthly income and put this aside in a savings account. Get used to the habit of regularly saving your money. You can increase the savings amount as you feel more comfortable.
You can also start looking into investing your savings early too. If you need advice, take a look at some wealthability strategies for investing your money wisely.
It is time to start making your money work for you for once!
- Expand Your Income Streams
Firstly, though it may be tempting, don’t pack up the day job straight away. It would be best if you got your savings up to a point where you could withdraw 4% each year and still have enough to see you to the end of your days.
The best way to complement your savings is to find other revenue streams. This could be through investments or starting a business, or a side hustle.
Time to invest in your hobbies. There are lots of ways you turn your passions into an extra income stream. Here are a few ideas:
- Write a blog
- Start an Etsy craft shop
- Sell products online
- Start a YouTube channel
- Complete Surveys Online
The more income streams you can start pulling in each month, the more quickly you will get close to your financial independence goals.
- Reduce Your Expenditures
Unless you are going minimalist in the LeanFIRE supporters’ style, you do not have to sacrifice everything you love to achieve this. There are lots of little ways you can reduce your daily spending.
Look into cutting back on your grocery expenditures. Start batch cooking and making savings on how much you spend on food. Limit how often you get takeout and go to restaurants or bars.
A car is a massive expense that can be removed entirely, especially if you live in the city. You will actually save much more money if you ditch the responsibility of owning a vehicle and instead take taxis everywhere.
Look at all your subscriptions to websites, applications, and magazines. Do you really need them all? Time to trim the fat and just get what you actually use. If you didn’t use that gym membership this month – then it is time to let it go.
Don’t make life miserable. If there is something you can’t live without, don’t cut it just to save for your FIRE future. You also have to enjoy living now as well as in your financially independent future.
- Choose Quality
Stop buying cheap rubbish that stops working in a few months. Whilst it might seem counterintuitive to spend more money upfront, and quality is actually the best investment.
You are following a FIRE strategy so that you can live well in your middle to later years. It would help if you were buying products that will last with you.
It is a false economy to buy the cheapest, only to have to replace it a few months later because it is broken or worn out. Consider the expenditure an investment in not having to pay out every few years on the same product.
Every cent counts when you are saving for your future. Invest in it by buying the best you can now and not suffering repeat costs down the line.
- Create a Budget
You can not do all of this math in your head. And if you are, there is an excellent chance you are severely underestimating your expenditures each month.
Look into budgeting software like YNAB and use it. Input everything you spend and everything you earn and use these figures to make your decisions about your financial future.
You can not save for a FIRE lifestyle with just a finger in the air. Get serious about your numbers and be disciplined in your financial routine. Track everything in and out and make sure you are saving.
Make These FIRE Movement Tips Work For You
Those were the seven best FIRE movement tips to help you start building the financially independent future that you want.
There is a lot of flexibility in the movement, so make it work the way you need for you. If you can endure the strictness of LeanFIRE, then you can reap the benefits earlier but remember not to do this at the expense of your own happiness now.
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