If you’ve been watching the financial headlines, chances are good you’ve heard of FIRE. It stands for “Financial Independence Retire Early.”
But what is retirement exactly? Well that depends very much on what your retirement looks like. Do you still want to work while retired? Or do you want to sleep in late and play video games all day like you used to when you were young? So how does F.I.R.E fit into all of this?
What is the F.I.R.E movement?
While many people associate FI and RE together, it really boils down to two separate concepts. First, financial independence is the ability to no longer need to work for additional money. Second, retiring early is the act of no longer working. But you don’t have to apply both of these concepts at the same time. You can just be financially independent, while still working because you love what you do. Or if you do choose to retire early you have that option as well. However, following the F.I.R.E movement will lead to a better financial future for you and your family down the road.
Steps to take now to achieve F.I.R.E
If achieving financial independence, early retirement or both sounds appealing to you, the concept of how to get there is easier than you’d imagine. Ultimately achieving FIRE boils down to three simple steps: cutting your expenses, growing your income, and invest.
Here’s what you need to know about each step in the process.
This can help you reach Financial Independence sooner and this is also where a budget can easily come in handy.
Cutting expenses is an extremely powerful move when you’re first getting started on your FIRE journey. For every $100 a month of expense you lower, the amount you’ll need to reach financial independence decreases by up to $30,000.
As an added benefit you’ll have more to invest to reach your financial independence early. However, don’t get too extreme, though. You shouldn’t be cutting expenses to an extreme unless you love living that extreme lifestyle. Instead, consider cutting expenses you don’t value and keep the expenses that make your life easier or more fun.
At some point, you’ll reach a number for your monthly expenses where cutting any other expense doesn’t make sense. It would make your life miserable.
Increase your income
While reducing your expenses is a quick win, there’s a better way to reach financial independence faster, and that’s by increasing your income. You could start a business that generates income beyond your wildest dreams.
You could also start a small side hustle to make an extra $1,000 per month doing something you love. Here is an articles to help you get started with a side hustle:
Whether you’ve decided to cut expenses, increase your income or both, you’ll end up with more money to put toward your goal of financial independence. By investing money you also end up creating another stream of income. And the best part you can start today with very little money, and it can quickly added up to huge amounts the earlier you start down the road.
Here is an article to help start you on your investing journey:
Like budgeting just pick a plat and stick to it. This is only the first part in a very long series I will be writing about F.I.R.E. So be sure to check back regularly to get more awesome tips and tricks to gain your financial peace of mind today.