This blog is 1/4 of our FIRE- financial independence, retire early mini-series brought to you by Kate Cambell, founder of How to Money (HTM).
Today I want to introduce you to a movement that is steadily gaining traction around the world, the Financial Independence Retire Early movement, commonly referred to as the FIRE movement. As a young university student and working professional, discovering this concept a few years ago completely opened my eyes and gave me a completely different perspective on life, work and money. FIRE gives you a framework to base your financial and career goals around and put steps into place to build wealth slowly over time, and it all starts from a base of financial education.
What Exactly is FIRE?
The goal of FIRE is to achieve independence from your 9-5 paycheck by saving and investing your money, so you are able to live off your investment portfolio. By doing this you gain the ability to ‘retire’ from the traditional workforce early, if you so choose.
I think the most important reason to be financially independent is the fact that you have a choice regarding what you do with your time. People that achieve FIRE often still continue to work a fulltime job, but the important distinction is that they are choosing to do it for reasons other than the need for a regular paycheck. It’s about using your money to buy back your time, rather than getting stuck on the hamster wheel of life.
What are Some of the Core Aims of FIRE?
- Increase your income and spend much less than you earn.
- Live within your means and don’t get caught up in chasing materialistic things.
- Invest your money with the aim of building a portfolio which will cover your living expenses indefinitely.
- Gain a thorough understanding of your financial situation and set and pursue solid financial goals.
- Learn about personal finances and investing.
- Give back to the local community and share your skills and experiences with others.
- Pursue your passions and stop trading your time for money.
Why is FIRE a Goal Worth Pursuing?
Whether you eventually want to start your own business, cut back to part-time work, spend more time with your family, go travelling or pursue further education, FIRE gives you the flexibility to pursue your goals without stressing about money and time. Although your journey to FIRE may take many years, the skills and knowledge you gain along the way are priceless. Working towards FIRE forces you to gain control of your personal finances, build a budget, pay off debt, learn how to save and invest, live within your means and build up your skills to increase your income. That all sounds pretty awesome doesn’t it?!
In part 2 of our FIRE miniseries, we’ll be diving into what it means to catch FIRE and staying motivated along the way!
- BBC UK: The Movement to Live Frugally and Retire Decades Early
- Aussie Firebug: Welcome to the World of FIRE
- NZ Herald: Could you retire by 45? These Kiwis think they can!
- Mr Money Mustache (The Original FIRE Blog – US Based)
- ChooseFI (US Focused FIRE Podcast)
Kate is the Founder of How To Money (HTM). Kate created HTM to help young Australians start talking about personal finance, and share the resources she finds along her financial education journey. Kate started her own journey a few years back and now works in the finance industry, while completing her undergraduate degree.