F I R E (Financial Independence Retire Early)
What is F I R E?
It is a lifestyle movement to achieve financial independence and make enough money for a sustainable retirement when you are young, by following extreme saving and investment technique.
The ideology behind F I R E originated in a 1992 book ‘your money or your life’ written by Vicki Robin and Jon Dominguez who propagated idea of living frugally and deriving income from investments to achieve financial independence early in life.
It has 2 elements of financial planning –F I (Financial independence) and R E (retire Early).
The former includes freedom from debt, having enough investments and having passive sources of income.
The latter (R I) means you work around your financial plan such that you have repaid all your debts and have created enough wealth to suffice and are ready to retire in your 30s or 40s.
This ideology differs from conventional practices where you do financial planning to achieve your goals but F I R E would require you to live frugally to cover your monthly expenses.
This movement has gained popularity since most people don’t like to work in cubicles for 30++ years of their life for a job they may dislike. Instead, they want to explore creative opportunities they like (with or without possibility of earning money) through their passion.
The pursuit of financial independence, breaking free from hectic corporate life is tempting to someone who values experience in life over material possessions.
F I R E has also helped people take active interest in personal finance when they are very young so as to enable them to embrace F I R E asap.
F I R E also has its challenges. It focusses too much on being frugal by cutting down all unnecessary expenses which could harm your mental health and affect family life.
Also adopting F, I R E to escape from a bad job may not be a desirable solution.
Hence even though concept is gaining momentum –better concept is to achieve financial independence (without being fugal) to pursue your own passion.
