What you can learn from the FIRE movement

Feb 19, 2019


You’ve probably stumbled on at least one clickbait article about people who retired in their 30s by living an ultra-frugal lifestyle. The articles usually mention the FIRE—Financial Independence/Retire Early—movement, which involves intense saving with the goal of setting aside enough money at an early age to see savers through the rest of their lives.

The FIRE movement isn’t for everyone. In fact, it is often criticized for its inaccessibility to individuals who are not earning enough to save so aggressively or who are burdened by student debt or other obligations.

   Do you have student debt? See other articles about balancing debt repayment with other financial goals.

Even for those who can save the majority of their paycheck, doing so may not be the right choice for personal fulfilment. For example, you may get a lot of joy and value from the money you spend traveling to see your family, or from the classes you take after work; maybe early retirement isn’t your ultimate dream.

You might not be stashing away 80% of your paycheck each month, but you can update your financial habits to be more sustainable and intentional. Some starting points:

  • Set savings goals that will finance your ideal future.
    The FIRE movement is all about living modestly today in service of a future in which you are free to live as you please (whether that involves working or not). While you may not be focused on retiring early, you probably do have a few big-picture dreams and goals.

       For more on saving and investing to reach particular long-term goals, see articles on goals-based investing and saving for travel and adventure.  

    Take time to reflect on what you want from your life today, in the near future, and in the distant future—and find out how much money it will take for you to pay for those visions. One of my favorite exercises with new clients is to come up with a vision board that pulls together images and words that call to mind their ideal future. Seeing everything you want in front of you inspires you to set financial goals to turn those dreams into reality.

  • Get acquainted with your future self.
    It can be hard to make decisions with your future self in mind. That’s why it’s so easy to procrastinate, and why many Americans are vastly underprepared for retirement.

       Are you on track for retirement? Check out this Bankrate calculator.  

    To achieve financial independence or meet any other big savings goals, you’ll need to bridge the gap between Current You and Future You. Try to make your future self as real as possible. What does a typical day look like for him or her? What are his or her hobbies and aspirations? Try reminding yourself of Future You whenever you’re tempted to make a financial decision that will take you further away from your ultimate goal.

  • Be frugal where it counts.
    There are a lot of ways you can save money in your day-to-day life without missing out on anything meaningful. Think about the parts of your life where saving a little bit of money will have the biggest impact—for example, even though restaurants are often thought of as the biggest waste of money, if you only eat out once a month, cutting that expense will have a lot less impact than reducing the biggest expenses in your life, like your housing or transportation bills.

       Use this Bankrate budgeting tool to track your expenses and understand where cutting costs might be the most beneficial to your 
    long-term financial health. 

    Review your monthly expenses to identify the categories where cutting back would have the biggest benefit on your financial plan. Then, ask yourself if you can cut back or replace any big purchases with secondhand buys or avoid them altogether.

  • Spend with intention.
    If you’re going to spend money, make sure it adheres to a few principles. Is it a rational purchase? Is it good for your mental, physical, spiritual, or financial health? Is the purchase in line with your goals for your current self and your future self? If you can make your spending decisions with those intentions in mind, you are likely to make much more rational decisions—and end up saving a lot more of your money.

Whether you’re looking to incorporate a little or a lot of FIRE principles into your financial planning, remember that saving with intention and living modestly can go a long way to financing the future you envision for yourself.

Kristen Euretig, CFP®, owns Brooklyn Plans, LLC, a financial planning firm dedicated to helping today’s women.

These articles are for informational purposes only and do not constitute tax or financial advice. Individuals should contact their financial professional for assistance.

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