The FIRE movement is very important to us at Illumination Wealth. It stands for “Financial Independence, Retire Early” and financial freedom is a goal that every American should have. We all want to save enough to give ourselves the choice to retire early, live life on our own terms and experience true financial independence for the rest of our lives. However, it is easier said than done.
This month, we want to dedicate the Illumination Wealth Blog to the FIRE movement. We’ll be sharing tips to achieve financial independence, build wealth and provide other pertinent news and information that anyone should find helpful. Whether you are in upper management, self-employed or the owner of a successful business, you can benefit from adopting the FIRE way of thinking.
First, let’s look at what Financial Independence, Retire Early (FIRE) really means. It is a concept that puts a focus on strategic savings and investment management. When done right, it can enable you to retire much earlier than most traditional budgets and retirement savings plans would allow. In its simplest form, FIRE involves dedicating a significant portion of your income to savings for investing purposes. The amount you save as a percentage of your income is correlated to the timeframe until you achieve financial independence. This can ultimately empower you to live comfortably, retire early and live off small withdrawals from your investment portfolio.
The idea of FIRE was brought to light by authors and personal financial planning experts, Vicki Robin and Joe Dominguez. They wrote a best-selling book called “Your Money or Your Life” that came out back in 1992. The ideas they shared in this book were centered around the FIRE premise, and it has been a popular financial movement ever since.
Within the FIRE movement, four different lifestyles have been defined. You may fall into one category or another based on your life situation and your long-term financial freedom goals.
1. Fat FIRE – Someone with a fairly traditional lifestyle who saves more than the average investor.
2. Lean FIRE – Someone who lives very minimally and devotes as much money as possible to their savings.
3. Barista FIRE – Someone who quits their full-time job, but still takes on some sort of part-time work or self-employment. These earnings are used to cover current living expenses instead of draining money from their retirement fund.
4. Coast FIRE – Someone who still works a part-time job for extra funds, but already has enough saved up to fund both current and retirement living expenses.
We’re just scratching the surface of the FIRE movement. Be sure and follow the Illumination Wealth Blog throughout February—and beyond—as we explore all the information you need to know about important topics relating financial planning, wealth building, tax planning, and retirement saving strategies.
For more information about or to schedule a no-obligation wealth planning consultation, contact Illumination Wealth today at (858) 246-6855.