What Do We Mean By FIRE Lifestyle?
FIRE Lifestyle Explained.
FIRE is all the rage with the millennial generation these days, no this does not mean that the millennials attempt to burn everything down. No FIRE means Financial Independence Retire Early. You can call this a method to beat the 9-5 rat race most people take part in. FIRE lifestyle aims to achieve financial independence and the accumulation of enough savings to help you after retirement. Meaning it helps you to reach an early retirement stage and enjoy a peaceful post-career phase. Most FIRE enthusiasts aim to retire by their mid-30s, and many of them achieve this goal.
Retirement in this case, however, does not mean that you stop working altogether. No. The point of FIRE lifestyle is to become financially independent by following a rigorous strategy and retiring early upon reaching the goal of financial independence.
What Do We Mean By FIRE Lifestyle?
The world comprises different ideas, personalities and passions. Your 9-5 job may pay you well, but do you really want to spend the rest of your life sitting behind a computer? FIRE enthusiasts believe that the regular 9-5 job not only serves as modern-day slavery, but it prevents us from following our passions in life. By achieving the goal of financial independence and retiring early, FIRE enthusiasts follow their passions in life, enjoy writing a book, pursuing arts, working on a project, learning new skills or engaging in philanthropic activities, etc.
This however is easier said than done. Surely everyone wants to live such a life. It takes effort to reach a FIRE lifestyle and achieve your goals. The process requires you to meet financial targets day in and day out. Also, cutting down your expenses to live frugally for 10-15 years and achieve the freedom you desire.
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Steps to Reach Your FIRE Lifestyle.
Your first step to achieve your FIRE lifestyle goal includes a calculation of what you need when you retire. This requires the prediction of personal expenses and forecasting them. Once you have completed the estimates, it allows you to work out the income you need when retiring. Next up FIRE enthusiasts focus on increasing their income streams and for this purpose, they focus on creating extra work through both active and passive income.
What Do We Mean By FIRE Lifestyle?
Many fire enthusiasts work their normal day job and then freelance at night or look for gigs to increase their income, some even take up two jobs if they can manage them. Next up, one of the key steps is to increase the savings rate. Fire enthusiasts have a savings rate of up to 60% – 70% whereas someone who does not follow a FIRE lifestyle usually has a savings rate of around 25% – 30%. Taking up the savings rate to such high levels require drastically cutting down expenses and this requires a complete lifestyle change.
What Do We Mean By FIRE Lifestyle?
Third, it is crucial to invest your savings. It is not possible to achieve financial independence without investing the savings to generate returns on their own. The savings need to work for you via the use of various investment options that pay a good rate or return. This usually requires some sound investment advice from an expert. FIRE enthusiasts also focus on creating multiple passive income streams as mentioned above. Investment is just one way of increasing wealth, having passive income streams can make you earn money even while you sleep.
Conclusion
Therefore FIRE lifestyle is all the rage these days, but it is not as easy as it sounds. It requires a commitment to make drastic lifestyle changes. If, however, it follows through diligently, then the reward at the end is worth the sacrifice.
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