Retire earlier? You’re on FIRE!
Forget The Pointer Sisters, because with FIRE, you can retire early and celebrate every day. But what exactly is the FIRE movement? The FIRE movement is a philosophy that focuses on achieving financial independence by consciously saving and investing. The movement originated in the United States and is gaining popularity here as well.
FIRE-WHAT?
FIRE stands for Financial Independence, Retire Early. It is a way to achieve more financial freedom. The idea behind the FIRE movement is to stop working as young as possible and live off the money you earn from investments. In other words, you will generate a passive income that you can use to retire for the rest of your life.
Maximizing savings and limiting expenses
To become financially independent, the FIRE philosophy relies on two fundamental principles: limiting expenses and maximizing savings. In short, you spend less than you earn. Choosing FIRE also means choosing a different lifestyle because limiting your expenses usually means sacrificing comfort.
Back to basics
Limiting expenses requires making conscious choices. Followers, therefore, choose to save on unnecessary, luxurious expenses such as travel, dining out, and purchasing a car. Some even go further and say that you are only truly on FIRE if you only buy second-hand clothes and are willing to drive half an hour further to save 20 cents on a pack of coffee beans. Of course, you can choose how far you want to go. The important thing is to be mindful of your expenses and take control of your financial future.
Smart investing
According to the second principle of FIRE, you maximize your savings by investing smartly. This is a bigger challenge for many because it requires delving deeper into the world of investments. You must understand how different investment products work, how to build a fortune, and how to manage your finances. Seeking help from a financial advisor or improving your knowledge in this area through online courses can be a solution.
The 4% rule
When you achieve financial independence is different for everyone because the less money you need to live, the less money you need to save to finance the rest of your life. The FIRE movement uses the 4% rule. According to this rule, you are financially independent if your annual expenses are less than 4% of your invested capital. This means that your fortune remains stable while you use 4% of it each year to live.
What about you?
Do you think FIRE is for you? Or do you prefer to build your passive income step by step? At Meeting-out, you can easily rent out (a part of) your home to businesses for meetings. No large upfront investments because you already have the house. But with the convenience of building passive income while you work. Want to know more? Absolutely! Discover everything about renting out on Meeting-out.
