FIRE: Financially Independent Retire Early - all you need to know about the concept that is grabbing youths attention

FIRE: Personal Finance is a vast concept and there are various new methods of managing one’s finances. FIRE is a new personal finance movement defined by frugality, extreme savings, and investment. 

Under the FIRE movement, several people have started working towards a single goal. The goal is to save enough money during 30s, 40s, or even 50s, and then retire several decades before the usual retirement age. 

The FIRE movement gained credence once in the 1992 book titled Your Money or Your Life by Vicki Robin, and Joe Dominguez became a best-seller and inspired thousands. 

How does it work?

‘FIRE’ follows an aggressive saving and investment pattern. Individuals remain in the workforce for several years and save up to 70% of their yearly income. When their savings reach approximately 30 times their yearly expenses, or roughly $1 million, they may quit their day jobs or retire from work altogether.

To cover their living expenses at a young age, FIRE devotees make small withdrawals from their savings, approximately around 3% to 4% of the balance yearly depending on the size of their savings and their desired lifestyle. 

FIRE requires a wise investment plan that will secure your retirement. The movement adheres to investing larger portions of its income than the average person. But the principle of setting aside a set percentage of your income every month for investment—and starting to do that as early as possible—will allow the growth in the retirement savings to a point where there will be an assurance of financial stability in later years.

Who can be a part of the FIRE movement?
It does not depend on the salary and any earning person can practice this movement. The main motive should be to save more and more.

What if the plan does not work?
The first part of FIRE stands for financial independence, something that, if achieved, can allow you to instead of retiring work at something you love rather than something you have to do. ‘FIRE’ is not just about retiring early; rather, it teaches you how to consume less while living better.