In this article I am going to define and explain the FIRE acronym. I’m going to talk about what FIRE is, and I’ll explain 4 steps you can take to achieve FIRE yourself! 🙂
FIRE Acronym: What Is FIRE and What Is the FIRE Movement?
The FIRE acronym stands for Financial Independence, Retire Early.
And the FIRE movement is the small but growing number of young people who want to be able to achieve FIRE.
Those who are a part of the FIRE movement (or who long to be) are generally young people (in their 30s to 40s) who are working hard in their professions and saving up a lot of money (often 50 percent of their incomes or more)—or who have already done so and have already achieved FIRE—in order to be financially independent early in life so that they can quit their jobs and retire in order to design their life on their own terms.
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How Can You Achieve FIRE?
If the FIRE movement has piqued your interest, then here are four steps you can take to work toward FIRE yourself.
1. You have to be willing to spend less than you earn.
In order to achieve FIRE, you have to be willing and able to spend less than you make (a lot less). The only way to retire early is to be able to save a lot of money. And the only way to do that, of course, is to spend far less than you earn.
2. You have to have a high income or be very intentional with your money.
In order to retire early, you have to earn a high income or else be very frugal or intentional with your spending—and most FIRE members do both.
Obviously, the more money you make and the more you tighten down your spending, the sooner you can achieve FIRE.
Both sides of this equation are super important if you want to FIRE. But even though I frequently emphasize on this website how to spend less money, and I honestly feel that learning to control your spending is the more important of the two factors when it comes to gaining financial stability and building wealth, I feel that earning more income has the greater potential impact. And let’s be honest—it’s just more interesting and more fun to try to earn more money than it is to try and continually spend less money.
The reason that earning more money has the greater potential impact is that there are only so many things that you can do to reduce your spending (but check out this article to learn more than 20 ways that you can reduce your spending in pretty much every budget category), but the opportunities to increase your income are nearly limitless! Check out this section of the blog to discover ways to earn more income.
3. You have to be content with what you have.
In order to retire early, you have to be content with what you have and not want to spend everything you make in an endless cycle of always buying more and more and more stuff.
4. You need to invest wisely.
In order to retire early, unless you make a ton of money and so you don’t need the money to grow in order to achieve and then maintain FIRE status, you generally need your money to be able to grow substantially by making good investments. Read this article to learn my best tips for investing for retirement.
Are you interested in retiring early? Especially once you start investing for retirement (or get serious about doing so), I recommend that you check out a great free app called Personal Capital in order to track your progress toward reaching your retirement and other financial goals. With Personal Capital, you can see not only all of your bank checking and savings accounts and even your credit cards and other finance accounts, but you can also link your retirement and regular nonretirement brokerage accounts.
This app allows you to have a complete, overall picture of your current financial situation. And you can also view your account history to see how your accounts and overall portfolio have done over time. I love this very helpful tool and use it regularly! Sign up for your free Personal Capital account here.
In summary, the FIRE acronym stands for Financial Independence, Retire Early. And the FIRE movement is the group of people who are working to achieve FIRE.
The FIRE movement is gaining some momentum—which is totally understandable. Of course the idea of being able to quit their jobs and be masters of their own time and their own lives would hold an awesome allure for most people.
In an age where most people are dissatisfied or at least not overly satisfied with their jobs (a sad reality of our time), that just makes sense. (But read this article to learn how you can quit the job you hate and transition to a job you love!)
If you are interested in knowing what it takes financially to retire in a certain number of years, check out this article by Mr. Money Mustache where he explains the surprisingly simple math behind early retirement.
Have you ever considered retiring early? Would you be willing to sacrifice to be able to retire early—potentially decades early? And what would you do if you achieved FIRE—what life goals would you pursue? Leave a comment below and let me know!
Invitation to Share
Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!
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