The FIRE movement is one that has gained traction in recent years. In fact, FIRE – which stands for financial independence, retire early – dates back to the early 1990s when Vicki Robin and Joe Dominguez published Your Money or Your Life which went on to become a best-seller. The movement has gained traction from podcasts such as Firedrill which is made by Gwen Merz from her home in the United States. In addition, another book, Early Retirement Extreme, written by Jacob Lund Fisker has helped to make the principles behind the FIRE movement better known since it was published in 2010.
Various blogs and magazine articles – especially those in lifestyle publications – have drawn more and more attention to the FIRE movement and what it stands for over the last few years. Millennials, in particular, have tended to embrace it. While hitting it big playing online casino games would be a shortcut to financial independence, the FIRE movement offers an alternative approach. What does it mean for your finances, your work-life balance and your chances of retiring early?
Living Within Your Means
Given the historically low interest rates which have been in place across the Western world since the global financial crisis took hold over a decade ago, some people have chosen not to save. Indeed, consumer credit has helped to fund the lifestyles of many people. The FIRE movement espouses a completely different approach. Under this system, setting aside large proportions of your income is recommended. The idea is that in lieu of attractive interest rates people will take charge of their own financial destinies. By setting aside up to half of your income – and even bigger proportions – it becomes possible to retire that much sooner. Anyone who dreams of giving up the so-called rat race might find this idea appealing. The question is the affordability of setting aside so much money from your monthly salary. That is why the FIRE movement also argues that people should live more frugally.
To achieve the dream of early retirement and financial independence from your employer, the pay off is – at its most basic - to live with less week-to-week expenditure. If you are able to stop unnecessary spending, then you could enjoy a retirement that begins in your forties, even in your late thirties if you really commit to the FIRE movement's ideas. That would make earning money in your middle age an option rather than something that is a necessity. By living well within your means and enjoying a frugal lifestyle, you could save sums that make this sort of dream a reality.
Is the FIRE Movement For Everyone?
Some people understandably criticise the FIRE movement's basic assumption that everyone can save at the sort of rates that are needed to bring about early retirement plans. People with children and other financial commitments can often simply not be able to set aside large proportions of their monthly salary. Indeed, people who have low incomes or the insecurity of freelance work and zero-hours contracts cannot always commit their cash flow into long-term savings products. That said, there is something to be learned from the FIRE movement's rejection of unnecessary spending, especially that which is based on costly consumer credit. Even if you cannot save enough for an early retirement, there is something to be said for the responsibility you take for yourself by putting together a proper pension plan, even one that only allows you to retire later in life.