Financial Independence, Retire Early. Sounds nice, right? But what exactly about the FIRE Movement is so lit? And why are so many people talking about it these days?
The FIRE Movement (FIRE stands for Financial Independence, Retire Early) is something that has been gaining momentum, especially with a younger demographic, over the past few years. It’s not a new concept, but basically, the driving force behind it is achieving financial independence in order to retire in your 30s or 40s (or 20s if you’re really ambitious).
Financial independence is defined as having enough wealth to live on without having to work. Or in other words, when you have enough assets to generate enough income to cover your monthly expenses. This could be in the form of interest from savings accounts, dividends from your investment portfolio, etc.
The general theory behind FIRE is you need to save about 25 times your annual expenses before you can live off of your investments (so, if your annual expenses are $40,000/year, you would need to save around $1 million to make this work).
Sounds easy in theory, right?
Quite literally, FIRE is about financial independence and retiring early. Those are the two primary goals behind it. But it’s actually more of a lifestyle choice. Saving that amount of money requires a lot of discipline. And while many ardent FIRE supporters have big salaries that make achieving those goals a little easier, a $100,000+/year income isn’t a requirement.
Going all-in on FIRE might not be for everybody, but that doesn’t mean there aren’t some interesting things to take away from the movement. Here are four key lessons you can take away.
Ultimately, it’s important to make sure you don’t get burned when it comes to your finances. Talk to a financial expert at your local credit union if you need a little help getting started!
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