FIRE Movement: How to Achieve Financial Independence and Retire Early

Updated on December 14, 2018
Luke Fitzpatrick profile image

I cover FinTech trends as a contributor to Forbes. In my spare time, I enjoy writing about parenting, productivity, and home improvement.

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Thoughts, ideas, and aspirations have changed with every generation, leading to new trends and possibilities. The millennial generation, who are used to high-speed broadband, non-stop entertainment, Insta-celebs, immediate gratification, and lateral thinking, look forward to a new future that is as enterprising as it is exciting.

The lifestyle of the millennial generation is markedly different from that of the previous generations in more ways than one. The baby-boomer generation, for example, generally aspired to buy a house in their 20s, banking on a 9 to 5 job to pay off their mortgage and march into the sunset of retirement at 60 with a secure space to call home. By contrast, millennials are experiencing a shifting job landscape characterized by casual employment and where the prospect of owning real estate is growing further out of reach. And, so, attitudes toward financial freedom are changing as well.

Living life on your terms

“What’s the point in waiting for 65 years to live the life that you want to live today?” asks Tom*, a new generation employee who has grown increasingly disillusioned by the prospect of being tied to his desk and workstations for the rest of his working life.

Australian millennials are willing to gain additional qualifications while they aim to earn more working part-time, shunning their full-time employment, searching for the holy grail of financial independence in their quest to retire earlier.

Welcome to the FIRE movement, the phoenix of the mid-20th century that has risen again in the minds of the millennials.

Who are the FIRE millennials?

The original FIRE brigade featured men in their 40’s who decided that normal retirement was not for them, and instead, wanted to explore the adventure called life when they still had the energy and the potential to live it. Tech workers took the lead when the Internet spread its web far and wide and when computing turned the corner, becoming digital nomads.

Now, FIRE has become the common purpose that unites teachers, nurses, librarians, health professionals, retail executives, and hospitality workers to a common ideological platform. Financial independence is a pursuit that has caught the imagination of young Australians who are willing to live by the new discipline that would liberate them in their 30s and 40s, rather than their 60s.

This is the case with Tom, an IT executive who is a programmer with a Sydney-based software company. Tom decided to share a 4-bedroom house with 3 others, limiting his meals to bbq chicken and sandwiches, postponing his planned vacation to Cambodia indefinitely, limiting his partying appetite to the bare minimum. And yes, he does own a handy bicycle that he rides to work, saving on the gym fees that he used to devoutly earmark every year.

Tom’s mission is simple–to cut his monthly outlay to 15% or less of his total. “If I can bring my savings up to 85% of my total annual pay of around $90,000 per year, I could save as much as $75,000 in a year,” says Tom.

What’s the FIRE mantra?

Financial independence and the ability to retire early is a mission that takes a concerted effort. “You don’t have to turn your life upside down to embrace FIRE” observes Tom. “If you manage to take $150 off your monthly eating out expenses, say, a regular coffee and croissant, you could end up being richer by over $35,000 in 20 years. Bring in inflation, the rising living costs and the fall in the value of money with time, your coffee and croissant could well be worth $50,000 to $60,000 in 20 years–and that’s getting $50–60K closer to achieving financial independence, straight out of your next door coffee shop!”

Throw in an additional stream of income from investments to what you could save from your everyday expenses, and you could indeed grow a fortune. While you keep yourself busy saving on your expenses and increasing your income from your existing job, you could get your money to work on its own through low-cost investments that can help to achieve your goals sooner.

Think beyond savings from bank accounts which are currently offering paltry interest rates. For instance, investment vehicles such as the low-cost A200 ETF are not only easy to maintain and operate but are also low in fees, giving you exposure to the growth potential of Australia’s largest listed companies, along with income via dividends.

What drives FIRE?

Tom and numerous other young Australian workers are driven partly to realize the potential of FIRE by the growing uncertainty in ongoing employment, along with rising costs and concerns associated with the state of the economy and the future in general. Redundancies in Australia are not new, housing prices have soared even taking into account recent falls, student loans have become a fact of life, and earning is tougher than ever.

When the odds are against the future, it pays to think out of the box and invest in brighter prospects rather than living the dreams of the past generations. The millennials are changing, and the FIRE is spreading faster than ever.

Note: The names in this story have been changed as requested.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

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