The middle-aged 65+ seniors come to mind when we think of retirees. But you’ve undoubtedly heard about cases of people who retired at 45 and are now living out their other dreams, such as traveling the world. Everything starts by the age of 20. Why did they succeed? by means of the FIRE Movement. The FIRE movement has been particularly popular in recent years because it promises financial independence and early retirement. But what exactly does this movement stand for, and how can you use it to your benefit both now and in your later years of life to ensure your financial independence?
Of course, things are different when it comes to retirement, but the FIRE Movement can be a source of inspiration for you to soon achieve your own financial independence and provide for your retirement as well. A lifestyle that strives for financial independence is embodied by the FIRE (Financial Independence, Retire Early) movement. By finding methods to increase their income or lower their expenses, those who adhere to it increase the percentage of money they save. The objective is to build up a passive income that will perpetually be able to cover living costs. As a result, one can choose whether and how much to labor in the future.
Although the majority of the movement’s adherents join it with the intention of quitting their jobs or leaving oppressive ones, experts say the real objective should be to accumulate wealth that enables one to pursue a dream, improve one’s daily life, and make decisions about one’s life without focusing solely on money.
- Aggressive savings model, greater than 10% of income (better 20 %)
- At a 10% savings rate, it takes (1-0.1)/0.1 = 9 years of work to save for 1 year of living expenses
- At a 25% savings rate, it takes (1-0.25)/0.25 = 3 years of work to save for 1 year of living expenses
- At a 50% savings rate, it takes (1-0.5)/0.5 = 1 year of work to save for 1 year of living expenses
Of course, the above model and the FIRE movement have been heavily criticized and characterized as a model of the rich, as it is difficult to save such a large percentage when one’s income is low. Another criticism of the movement is that there is insufficient evidence to show that those who have retired through it have saved enough money for their retirement, since the limit has been greatly reduced and its duration increased. Many also refer to the fact that in order to save this large percentage they resorted to extreme solutions that forced them to deprive themselves of daily small pleasures and this made them less happy.
In any case, all of the above is possible as long as your income is sufficient and allows you to save a larger percentage, without depriving yourself of your small, beloved habits.
- 3 FIRE Movement Things You Can Keep in mind in your early 20’s
- It’s never too early to enjoy life
- Your expenses, unlike your paystub, are a key factor related to your pension and can be more easily controlled
- The most enticing thing behind the FIRE movement is control
- Application in everyday life without depriving yourself
The FIRE methodology places more emphasis on the variables you can control, such as your expenses and how much money you save, because your income is frequently a fixed component.
Consider how you envision your existence in 5, 10, 20, or 30 years. Where do you want to be, and what are your (personal and professional) goals? You can shape your capital to accomplish your goals once you’ve decided what they are.
- Basic savings tips
- Try to spend less than you earn
- Keep track of your expenses to get a feel for it
- Calculate how much your lifestyle costs and see what you can reduce based on your expenses
- Spend your money wisely
- Savings and good life go together!
See below some ways that you can apply in your daily life to reduce expenses but not the pleasure they give you.
- Search the internet for events, shows and sales techniques with free entry in the city and in your municipality.
- Increase your income by working as a freelancer using new digital platforms. See more here.
- Change some daily habits that cost money, such as ordering out often or not having a schedule and list at the supermarket.
- Put your plan into action
The classic savings method, as stated above, is the first thing that comes to mind when we consider how we can build up capital to accomplish a long-term financial goal, such as paying for our children’s education or maintaining our standard of living in retirement.
However, the economic climate we experience today is different from that of our ancestors. Because we do not have the same amount of disposable income as they do and because conventional deposit accounts have relatively low yields, we cannot compare our situation to theirs. Turning to investments is one remedy, but even there it can be challenging to manage the market. But not only businesses or people with big capital can make investments. You can build up your financial resources for the future and see a return on your investment over time with the proper plan and disciplined effort.
You may be able to find an answer that combines investment and insurance through investment-type insurance programs. These programs provide long-term gradual investment through a planned system of regular payments and are linked to investment goods like mutual funds. The advantage of these plans is that they are adaptable and include life insurance, which protects your family.
The programs are a good choice because they can guarantee you both a decent return on your investment and long-term insurance benefits. You can accomplish any long-term financial objective, such as home ownership, pension enhancement, or child support, by methodically investing in the programs.