The author must be crazy.
If this was the first thought that flashed through your mind as you read and then re-read the header of this post, then firstly, I did good as a Marketer and secondly, I am actually not that crazy.
What is F.I.R.E?
FIRE does not refer to the fire you thought but it stands for “Financially Independent, Retire Early” and actually is one of the most prominent movements in the world of personal finance right now. The goal is to save and invest aggressively -somewhere between 50–75% of your income — so you can retire sometime in your 30s or 40s. Thatʼs right: You need to save at least half of your income.
So, if you deduct the pinch of clickbait I used in the header, this is really F.I.R.E. How do people do it? In order to sock away that much money for investing, folks who are on F.I.R.E. are always looking to do two things: keep their expenses extremely low and find ways to raise their income.
The general idea is that the higher your income and the lower your expenses, the faster you can reach financial independence. Think gazelle intensity — except the gazelle is literally on fire.
For those in the F.I.R.E. movement, “financial independence” doesnʼt just mean sitting on some tropical beach or playing golf all the time. It means reaching the point where you donʼt have to work a full-time job if you donʼt want to. You can scale back to a part-time job or simply stop working altogether. The choice is yours . . . imagine that!
So here’s the Top 5 Ways to set yourself on F.I.R.E:
- Plan Your Expenses
This may sound primitive but if you have seen the ghastly, yellowed bound books of monthly finance with your grandparents or parents that they refuse to give up, especially if you hail from an Asian or South Amercian household that is too difficult for technology to penetrate, you know what I am talking about. You must
have had at least one of these elders tell you how important it is to have one of those things that constantly reminded you of the ghost of a book. Let me tell you, they were not wrong! Even if you made a disgusted face back then and pulled the same even now, it is what it is.
Sure, you do not have to use those books. This can go on one of your fancy tabs or pads or phones but outlining your expenses or potential expenses help you focus — especially when you are at the very beginning of your career or when you just switched roles or cities or even moved countries.
Planning your expense is not the same as budgeting. Budgeting, at times, can hold you back from doing the things that bring you joy but the budget, at the back of your head, forces a second thought, a deliberation and a contemplation. Budgets are good, not always necessary, especially when you already have a mind-map. But when you plan your expenses and categorize them to small, medium, large, expected, unforeseen and emergency, this adds the necessary focus in terms of personal finance.
2. Calculative Overspending
The reason why the millennial needs to be a part of the F.I.R.E movement more than ever is we are coached to overspend. Thanks to our lifestyles, heavily fueled by social media and the idea of the ‘pseudo perfect’, it’s almost impossible, improbable and impractical to ask someone not to overspend at all. So the more viable option to have a bit of both would indicate to calculate your overspending and hold back later because we know there is no coming back from this path of unncessary luxury marketed to us in a sugarcoated bubble of ‘must haves’.
3. The Gig Economy
One of the best ways to breathe FIRE is to actively be a part of the gig economy where you make the best use of your finest skills to hone them further and load up some extra income at the same time. This is where you look to increase what you bring in to a point where you no longer have to think twice for a tiny, recurring expense or have a sufficient cushion to fall back on in terms of kicking off an investment portfolio.
David Bach’s Latte Factor talks about seemingly irrelevant expenses that become a monster in the knack of time and something almost each and every individual today is a victim of, consciously or subconsciously. It is probably unlikely to 100% eradicate the latte factor from someone’s life but throw some gig economy in the mix and you are most likely to earn your latte factor and still have enough to spare!
5. The back-up of the back-up of the back-up
One of the biggest issues of our generation and most others is we seem to either look for a shorter and faster route that magically takes us to Aladdin’s Cave or we hit the darkest nooks and crannies of depression the very first time an idea hits rock bottom. Today, we have access to more financial instruments than anyone has had in the history of Finance. The ease of access requires you to move yourself at the maximum of ten feet from your current position to an electronic device that can do all your bidding. This is when you learn to back up your back up. Maybe back up even that — because the markets are volatile and anything can happen, any time.
This is perhaps one of most non-appetizing advise one may ever receive. But decide to set yourself on FIRE today and you, my friend will only be looking forward to desserts for the rest of your life.
