Unveiling the FIRE and do you need to go for it!?
FIRE in finance is a bit strange kind of a fire.
It lets you bloom in this life with absolute independence from all types of down-dragging chains of the society, and helps you to make your own stand in terms of wealth and worth.
This word stands for Financial Independence and Retire Early. A dream wish for many, but not an easy goal to achieve.
Retirement planning is probably the most important section of personal finances.
It is about making yourself financially stronger and healthier for the rest of your life, after you quit from conventional workforce. Retiring in the correct age, is something, but retiring early is a totally different situation all-over.
The FIRE Movement is aimed to bring you financial independence and help you to retire early, than the time you would take normally.
If you are wise enough, then you must know that there are no shortcuts for building sufficient wealth, that can bring a distant thought of retirement, a lot closer.
Thus, to attain FIRE, you have to start doing surplus amount of savings, right from now.
A single moment wasted in retirement planning, is a loss of a lifetime. But, should you be making this big a sacrifice, of your present life for the future life? Or, should you be doing minimal savings, and keep on going with an escalated lifestyle, that you prefer living? This question drifts off from the normal courses of finance, and enters into the realm of ‘Probability’. Let’s ask yourself this small but strong question - What guarantees are there that you will stay alive, say TOMORROW??!!
Your answer will start with chances, predictions, beliefs, assessments, and so many other probabilistic phrases, that “yes you should survive, if all is okay, if you are wearing your seatbelt, if no electric leaks in the loo, if no brain stroke and panic attacks, if you are careful in the streets, if you can, if you do this, if you do that, and so many other Ifs.…..”! In the same way, your retirement also depends on so many ‘ifs’ and ‘chances’, to make it happen for real. Plus, you will start to save rapidly for your retirement, only after you can totally rely on the fact, that ‘of course’ you will be there ‘alive’ to enjoy your retirement! Considering all are green signals, and you are pretty sure that you will be there to party in your retirement, let’s discuss how to attain FIRE, and what FIRE options should you be choosing.
To attain FIRE, the few things you must know:
FIRE comes at a cost:
The price is huge. To become financially independent, and retire early, you will have to make sacrifices today, for a better tomorrow.
Hence, no matter whatever is your income, you have to save up, at least 20 times of an amount, that is equal to your total annual expense number. That’s the total amount you got to have in your account, before you retire.
And, to do so, you have to pay the price now, for securing your future. This price is abstaining yourself from any high mode spending activities and leading a showey instagram-genic lifestyle.
If you think, that you can do haphazard spending, but still be able to retire early, then you are seeing only an illusion.
Even a rich man also needs to sacrifice a lot, for retiring early with 20 years of lifestyle cost secured, that too factoring in the inflation rate, that the market will face over the years.
It’s said to be better, if you can keep aside more than 50% of your income for savings, each month! It might look easy to say that, but for doing so, your sacrifices may become very hard to keep up with. FIRE is costly. Not everyone can attain it, still everyone ‘can’ with long term investment in hard labor and time. Moreover, this is not a game of savings only. All your debt and credit related activities need to be suspended for a long time, unless you are building an investment portfolio with them, like home loans, stocks, bonds, etc.
Therefore, summarizing it, try to have no debts around you, and omit all unnecessary expenses.
FIRE needs sincerity:
Next, nothing big and great can happen to you, if you are not patient in achieving it, and not humble after achieving it. That’s one line for you, to dig into. FIRE is about this. A dedication and sincerity that you have to possess, to achieve FIRE. This is FIRE. This is the part that I need you to get into your head. It is an energy, for you to muster. And, this energy will get you the freedom, and give you the power to stand independently of any second person monetary help, for the rest of your life. The amount of savings, we are talking in FIRE is relatively huge, when compared to normal savings, that most of the population does. This savings, is at times equal to 50% of your total monthly income. And, the calculation will be for a long time. Say, for the coming 7 or 10 years. Only then can you retire early peacefully, with your desired savings amount in the bank vault. And, accomplishing this goal, you need to have patience, and keep on doing this much savings every month, sincerely.
FIRE involves probability and predictions:
The last but the most important calculation involved in attaining FIRE, is probability and prediction. To remember, you will be putting down money toward retirement, based on predictions about what your future days will be, how much expenses you will have to encounter in your retirement, and how much you want to expand your net worth. All these mandatory calculations are, what makes FIRE planning so complex and troubling. Therefore, if required, you might need to take help of financial consultants and money experts, to assess your FIRE requirements, and know with proper calculations, that how fast you can achieve FIRE, like for how many more years you have to work with a stable income.
How to customize FIRE, to suit you the best:
Even though you want to achieve FIRE, to relax in your retirement days, still doesn’t it sound very hypothetical if we are to say, that a person retires at age 40, and spends the rest 40 years doing absolutely nothing, only eating and sleeping?? Getting financial independence doesn’t mean that your job is done, and you can spend your days, tasting the time, with your hands above your head, and an elegant smile on your face. Wear it off, man, wear off! FIRE is retiring from working under someone else’s employment and rule. Most appropriately saying, it is making yourself potential and capable to work for yourself.
Heard this song, before? If not, then give it a hear.
“Well, I get up at seven, yeah
And I go to work at nine
I got no time for livin'
Yes, I'm workin' all the time
It seems to me
I could live my life
A lot better than I think I am
I guess that's why they call me
They call me the workin' man
They call me the workin' man
I guess that's what I am”.
>>>Rush, Working Man.
FIRE (Financial Independence, Retire Early), is so much sought after, because to break free from this ‘Working Man’ routine!
And, the early you retire from the stereotypical workforce of an employee, more time you get to do the things you want to do.
To attain the best FIRE, you might be better off having 2 incomes in your portfolio:
Many who wish FIRE, have 2, or at times 3 streams of income, at the same time. That can be really frustrating, but definitely worth it. What they do is, they keep a separate fat income for building retirement savings and doing investments, while they use another income to pay for day to day expenses, by being frugal! That is what the game looks like, for a successful player. Once the desired savings amount is reached, the person starts to quit the ongoing jobs, one by one, and enters the stage of retirement, by only staying in a run-of-the-mill workforce for 7 to 10 years. Try to tackle multiple incomes, for securing Financial Independence and Retire Early.
Enough is never the word, in terms of wealth, lying on the lips of those who are desperate for FIRE.
Start to comment below, your story of FIRE (Financial Independence, Retire Early), and/or how you aspire to achieve or attain FIRE.
Your participation is anticipated!