Hello My Financial Literacy Family, Thank you for joining me today and helping me with my goal of spreading financial literacy. My question for you today is…Are you on FIRE? If you don’t know what I am talking about, let me explain. FIRE (all capital letters) is an acronym for Financial Independence, Retire Early. It’s actually called the F.I.R.E. Movement.
What is the FIRE Movement?
The FIRE. Movement is a lifestyle movement. Those in the movement have a plan to retire early. The plan involves a very aggressive saving and investing strategy. Those following the movement live off a low percentage of income, leaving the rest of their money for saving and investing. The method actually involves lowering their living expenses as much as possible while at the same time earning as much as possible.
More specifically, the FIRE Movement targets saving 70% of your income in order to retire much earlier than the standard 65 years of age. The theory is that this amount should allow you to live off your investments during retirement. This is based on the idea that during your retirement, you can then live off 4% or less of your investment money each year, while at the same time the remainder of your investments continue to grow.
There are two things about the money that you save while living your FIRE Movement lifestyle.
First, you need to save as much of the money as early as possible. Second, you don’t actually ‘save’ the money. Instead, you must invest the money, in order to maximize your income earned from the investments.
What kinds of investments can you use to reach FIRE?
You can invest into anything with which you feel comfortable. Some examples of possible investments are rental properties, stocks, or a small business that can become a passive business.
Am I Suggesting That You Should Stop Working at Age 30 or 40 (Like those in the FIRE Movement)?
Now, I am not an advocate of not working. My goal for my daughter is not to stop working. My goal for her is to have options at the work that she does. If she has a job that she loves, why would she stop doing it? People need to have some sense of accomplishment. It feels great. And you can focus on that goal when your goal of having enough money is achieved. As someone once said, “Work is better when you don’t need the money.” (I didn’t make this up. But, I wholeheartedly agree.)
How does this relate to the FIRE Movement? Well it means that I am more interested in the FI part of FIRE. (The RE part of the FIRE is optional if you have the FI!) So, I am really impressed at how those who follow the FIRE Movement focus on how they spend their money.
In short, I suggest that even if you do not plan to retire early, methods of the movement can be used temporarily to speed up getting rid of debt and increase the amount of money that you have invested.
Are You On Fire? Is The FIRE Movement For You?
Whatever your plan for retirement, you should attempt to save as much money for retirement as you can as early as possible. The earlier you start saving, the less you will need to save each month. This is because your money will have more time to compound and grow. Time is the secret ingredient to generate wealth when it comes to investing. So, if you are part of the target audience of the Rich Mom Poor Kid blog, you are the ideal age to start focusing on saving for your retirement. This is a time when your expenditures may be less than later in your life. This is because: Maybe you don’t have children yet, or your children’s needs are not as expensive as they may need later when they may need money for college. Your health is likely to be pretty good, or at least better than it is likely to be decades from now. (This allows you to do two things: Spend less on health expenses and spend more time and effort generating money.) It’s easier to reduce your housing expenses by, for instance, living with someone else. This should leave you more money for investing for retirement.
Key Takeaways Regarding The FIRE Movement
- FIRE is an acronym for Financial Independence, Retire Early.
- The FIRE Movement advocates aggressively investing so that you can retire early.
- In the FIRE lifestyle, the source of investment money comes from severely cutting the amount of money that is spent, while at the same time, earning as much money as possible.
- Members of the FIRE Movement often shoot for saving and then investing at least 70% of their income.
- Even if you do not plan to retire early, methods of the Movement can be used temporarily, to speed up getting rid of debt and increase the amount of money that you have invested.
So, what do you think about the FIRE Movement? Will you join the movement? Or, will you use some of the methods to save and invest more? Let me know in the comments.
Wishing You Many Life Successes,
RIch Mom
P.S.
If you like the financial literacy information that I have provided, I ask you to do two things:
1) Please subscribe and follow. It helps Google to know that it should keep sharing my posts.
2) Share a link to my blog with someone who you want to have financial inspiration.
Do you want to read about ideas on how to get better with your money?
Earn as Much Interest as Possible
Spilling the Tea On Five Things That I Don’t Spend Money On
Top 13 Things To Remember About Budgeting
Do you have money for investing, but not sure where to start, try Acorns
Not only does the Acorns App help you simplify and automate your investing, it also allows you to boost your investments using your spare change. I love it!
Looking for other financial resources? Check out the Rich Mom Poor Kid Resources Page.
Who is Rich Mom?
If you stumbled upon this post and you are wondering who Rich Mom is, check out my “About Rich Mom” page.
Also, please note: I am not an investment advisor. Always do your own due diligence and research before investing. Check with your own investment advisor.
Also, remember that past performance is not a guarantee of future performance.
The information shared here is not intended as financial advice, just entertainment and encouragement.
Stay Connected:
Facebook: Rich Mom Poor Kid on Facebook