They will tell you; we’ve been conned… They will save, pretty much, everything that they earn… I think it’s extreme, but they’ll drink box wine, instead of bottled wine… It’s such an old concept that it’s new again…— Warren Ingram, Galileo Capital
FIRE is an acronym for “Financial Independence and Early Retirement”.
It’s a movement gathering momentum in the USA and elsewhere.
Financial independence is fairly well understood by now.
It refers to having sufficient assets so that you can earn an income from them that will cover your lifestyle costs.
Generally, most people work throughout their adult lives to achieve financial independence.
FIRE turns the concept on its head by getting people to focus on what they would need as a bare minimum to get by every day and from there they work out how to achieve this minimum standard.
This would involve asking yourself questions like:
Do we need two cars (as a couple), or do you need a big SUV?
Do you need the latest smartphone?
Why do you need to live in a big city and in a house with more bedrooms than inhabitants?
Can you grow your own food – not as a hobby but as part of your daily existence?
Can you barter your excess produce with others for things that you need?
- If you are not able to stop working completely, can you live a largely FIRE existence already so that you can save 45% to 75% of your salary to reach FIRE?
Most people who belong to the FIRE movement continue to do some side jobs (gig economy) but they are able to earn sporadic income from these gigs without undue financial strain and so the additional income becomes a bonus for luxuries rather than necessities.
Some people in the FIRE movement are quite extreme, but their principles are valuable and provide some interesting insights as to our priorities as investors and savers.
Are you prioritising your life correctly and spending your time/money accordingly?
For more detail - and inspiration - listen to the interview in the audio below.
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