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FIRE: How you can achieve early retirement and real financial independence

You might have heard of this phrase before. FIRE – Financially Independent, Retired Early – is a concept that’s becoming increasingly popular in 2019 and beyond.

It’s easy to see why. We can all think of times where we’ve had to make decisions based on our lack of savings, instead of embracing the opportunities before us that cost more than we can afford. We all can agree that retiring earlier than the norm would be lovely, too!

In this article, the Everyday Loans team are going over FIRE in a little more detail. It can be a great motivating tool to get saving, but it comes at a cost, and that cost is discipline. Keep scrolling; we’re about to get started!

Let’s start with the basics: What is FIRE?

When we think about retirement, most of us conjure up a vision of being in our 60s. It’s the norm for our society to retire at this age, and that fact is reinforced by the state pensions available to most of us as citizens of the UK or our respective countries.

FIRE takes that norm and changes it. It talks about retirement when you’re 40 or 30 – even before that for some exceptional individuals.

It’s an interesting and intimidating subject, isn’t it? The immediate thought is ‘I’ll never do that, I don’t make enough!’ – and while income accelerates the process, it isn’t the only aspect in this story.


A tough lesson

So, how can an average person live within their average means and still retire early?

Unfortunately, the truth is tough for most: you live a frugal, careful life. There are plenty of stories of people who have achieved FIRE while only living on a salary of £35,000. The catch? They start early, and they get very, very good at budgeting and frugal living.

That isn’t to say the life is joyless. Far from it. Many reports feeling a sense of liberation exactly as a result of dedicating their time towards careful financial living. Keep in mind that we all live under a routine; it’s simply down to us how we choose to structure it.


So I’d quit my job?

Not at all. It’s a common misconception where FIRE is concerned.

In truth, it’s about freedom. The freedom to pursue what is most fulfilling to you in life, and the freedom to do so when and where you choose.

For some, that means staying in their jobs because they love it. For others, it means the ability to quit their current position and seek the training and investment they need to work their dream position and vocation.

Others might indeed choose not to work anymore, but interestingly most don’t. Fulfilment is a huge part of happiness, and most FIRE achievers will find themselves drawn to working harder than they ever have before in their lives – simply because they love what they are doing.


How can I get started?

A major element of achieving FIRE is investment. Utilising government investment options that minimise tax go hand in hand with careful, long-term investment in common options like index funds.

Interestingly, this is a very low-risk approach. FIRE isn’t achieved by throwing caution to the wind and investing in high risk, high reward stocks and options – quite the opposite. It’s a game of inches that is started soon and planned meticulously.

There are plenty of resources on how you can begin this journey. It’s important to keep in mind that you don’t have to retire early once you’ve begun your savings journey; if you decide against the FIRE lifestyle halfway through your progression towards it, guess what: all you’ve done is build an exceptionally strong financial position for yourself and the plans you want to make in future. Oh, the horror!


More food for thought

What an interesting concept! It’s exciting to think we could retire early and live how we want. The Everyday Loans team think that, even if you don’t pursue FIRE, acting in such a manner will help build your saving discipline. That’s no bad thing at all.

If you’re in need of a loan to get through your present financial situation, do drop by our website main page for more on our service.

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Tim Woodley
Financial Content Editor at Everyday Loans
Tim Woodley has been a financial copywriter for over 8 years, using his experience and skill to draw out and discuss interesting financial subjects and learning points that help make life better. https://www.linkedin.com/in/tim-woodley-725267133/