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F.I.R.E. stands for “Financial Independence, Retire Early.” It is defined by frugality and aggressive savings and investing. The goal of many people who are following the FIRE movement is to retire early. Retirement doesn’t have to mean working a corporate job until you’re 65. Retirement is no longer an age – it’s a financial number. The faster you can reach that number, the faster you can retire.
How can you achieve retirement as early as in your 30s or 40s? Achieving such an aggressive goal requires two main things – keeping expenses very low and finding ways to earn extra money. The FIRE movement isn’t for everyone, but it shouldn’t discourage you from building wealth.
Financial independence doesn’t necessarily mean not working or sitting on a beach somewhere all the time. It just means reaching a financial point where you don’t have to work if you don’t want to. You could work part-time or could choose to not work altogether. The great thing about being financially independent is that you call the shots!
1. Define What Retirement Looks Like For You
Before you even start adjusting your budget and finances, determine what retirement will look like for you. There are lots of retirement calculators online that can help you with this. You’ll need to consider your financial goals and how much money you’ll need each year to maintain the kind of lifestyle you want in retirement. There’s also the unknown variable of your lifespan.
2. Lower Your Expenses and Keep Them There
The lower your expenses, the faster you will be able to retire. You also don’t want to be miserable while you’re trying to get there, so you’ll have to find a balance that works for you.
Take a look at where your money is going and find ways to make reductions in things you don’t need. For example, consider cutting ties with TV and streaming subscriptions. Consider keeping cell phones longer and driving an older car instead of a newer, more expensive one. If you need help with planning a budget, check out my 7 Steps to Create a Personal Budget blog post.
Retiring at an early age will take discipline. If you make a budget and commit to following it, reaching your goals will be that mush easier.
3. Find Ways to Earn More Money
One of the main barriers to being able to follow the FIRE movement is having a large enough income. You will need to find ways to increase your income. If you’ve been doing a good job at work for a while on the same salary, consider asking for a raise. If you are paid by the hour, ask if you can work some longer days or extra shifts. You could also consider doing some job searching to try and boost your salary with a new job.
Adding a side hustle or second job is also a great way to earn additional income. Depending on your skillset, you could drive for Uber, pet sit, flip items for profit, own rental property, or find ways online to make extra money. Searching online could help give you some other ideas. Also, check out my 5 Websites to Make Money With Print on Demand blog post.
4. Prioritize Saving and Investing Money
In order to be able to retire early, you must start saving extra money and investing as soon as possible. The earlier you start saving and investing, the better. You will reap the benefits of the time value of money with compound interest.
People who aggressively follow the FIRE movement actually try to save 50% or more of their income. This is a very aggressive goal which not everyone is able to do right away. You can try starting smaller and work your savings rate up gradually, depending on how soon you want to retire.
The FIRE movement may not be for everyone. Even if you aren’t planning to retire early, though, you should still be planning for your retirement.
If you are interested in learning about more ways to achieve financial independence, you may want to check out this best-selling book that inspired the FIRE movement: Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence by Vicki Robin and Joe Dominguez.
Check out some of my other posts on saving, making, and investing money:
- 7 Steps to Create a Personal Budget
- Financial Checklist: 10 Things to Do Before Year End
- 7 Habits of Successful People Who Are Never Broke
- 5 Websites to Make Money With Print on Demand
- Why Should I Invest in an IRA?
- How Does Compounding Affect My Investments?
Disclaimer: This information is intended for educational purposes and is not tailored for the needs of any specific investor. It is important to conduct your own analysis and research before making any investment. It is recommended to independently research and verify or seek financial advice from a professional in connection with any information on this website before using it to make an investment decision or otherwise.