Financial Independence, Retire Early (F.I.R.E) movement is growing immensely in popularity over the past few years, gaining millions of followers and capturing the interest of millennials ( or anyone whose current lifestyle leaves much to be desired) to save hard and fast to fund their future.

There’s a lot of talk about the FIRE movement these days. On one hand, it’s generating awareness around financial freedom which every investor should know more about.

So, here are the 10 straightforward, possibly more contemporary life hacks from the FIRE movement.

  1. Pay your debt

Skyrocketed inflation, and gas prices, have made the crisis worse globally. It’s hard to save and invest when you have debts left and right to pay. Regardless of the cost or the reason, debt causes mental devastation in our minds. Many people find themselves in a debt cycle and are driven to pay it off completely as soon as they can. It is wise to do this, but not at the expense of safety. Consider this. One day you might pay off every last penny, but the next day you might be unable to work due to an unforeseen circumstance. You swiftly return to your starting point after that.

  1. Save More and Spend Less

Savings is next in line after debt repayment. FIRE supporters use any extra money from their paychecks to save as aggressively as they can. FIRE supporters place a high priority on saving and investing at least 50% of their income in order to retire earlier. Many financial professionals advise setting aside 20% of your salary. It should be a sustainable, lifelong habit to save for the future. A year’s worth of spending in your savings account is the short-term objective. Once you have this kind of safety net in place, you can handle unforeseen circumstances without running up credit card or unsecured loan debt.

 

  1. Maintain to be Financially Independent

To be financially independent, you must have accumulated enough wealth and savings to support your existing standard of living without having to worry about finding new sources of income. This entails setting aside enough money to withdraw, say, 4% annually. FIRE enthusiasts frequently engage in side businesses and freelance work, which enables them to partially finance their lifestyle through both these withdrawals and passive income.

  1. You don’t need to quit your work right away

Many FIRE movement detractors think early retirement and leaving one’s current job are risky decisions. It can be, which is why many adherents wait to leave their day jobs until they have saved up enough money to cover their costs for 24 months. FIRE is based on maximising income while reducing expenses. Some followers might leave their jobs because they don’t really enjoy them, but others might look for alternate employment through part-time, contract, or freelance work for flexibility.

  1. Pursue your dreams/hobbies

One of the main reasons the FIRE movement struck a nerve with millennials stems from a longing to have a work-life balance. Employees are now looking for more job satisfaction and are seeking more from their jobs. Having daily or weekly routines that stimulate you outside of work is crucial. As FIRE aims to allow followers to retire early, hobbies and lifelong learning become important pastimes that can be enjoyed during and after your working life.

 

  1. Be Frugal

Regarding the degree of frugalness, FIRE supporters differ from one another. Followers of the so-called “LeanFIRE” movement adhere to the theory that a simple strategy works best. This entails avoiding any unnecessary expenditures and gatherings where there is a chance for overspending.

The “FatFIRE” principles, on the other hand, allow for date nights, vacations, more social gatherings, and rewarding oneself with small indulgences along the road. The catch is that any potential savings are quickly lost when money is spent on these activities. The key is balance.

  1. Quality > Quantity

When you shop, pay attention to make every dollar count. Many FIRE supporters think that spending a little bit extra to buy high-quality brands and products when buying necessities will pay off in the long term.

While a few $200 vacuum cleaners only last 2-3 years apiece, a $400 quality vacuum cleaner lasts 8 years. Because of this, these products become mini-investments that pay for themselves.

  1. Budget

Budgeting is essential for any longer-term financial plan. The finest FIRE adherents track their daily spending down to the last cent, classifying each purchase, taking advantage of any discounts offered on larger purchases, and attempting to buy used whenever possible.

Although this might seem excessive, opportunity cost should be a key consideration in any circumstance involving spending or saving. The difference between saving $100 or $120 a week may not seem like much now, but over ten years (and assuming a 7% return), it could compound to a difference of $15,000 or more.

  1. Use Public utility vehicles/Bikes/Walk

Even a small or medium-sized car can cost its owner $5,000 to $10,000 annually (or even more if it’s financed). The majority of Australians don’t consider minimising one of the biggest drains on potential savings, pink slips, registration, insurance, servicing, tolls, and gasoline.

Many followers travel using bicycles and Ubers. Of course, not everyone will be able to do this, but looking at your local public transportation schedules and doing the math might be a good exercise.

  1. Retire Early 

The goal of the FIRE movement is to help participants become financially independent so they can retire early. The FIRE movement does not define retirement as ceasing all employment permanently, though you are welcome to do so if that is your goal.

 

There you have it, then. Hopefully, these life hacks from the FIRE movement will spark your curiosity.

You’re FIRE(d)!