Today let’s talk about an interesting financial movement that has gained traction in the recent past but is not so famous yet in India – the FIRE Movement.
Retirement is generally thought of as an age beyond which we will not work. However, this concept is now changing. On the one hand, medical advancements mean that we now live longer than ever before forcing many to work longer to ensure that they have enough money to last their lifetime.
On the other hand, the awareness of budgeting, saving, and compounding is increasing, and people are getting better at managing money. Meaning that those who are smart about it can retire earlier than they might have expected because they have saved up a sizeable nest egg.
This makes the retirement age a moving goal post. The key is to ensure that your retirement funds can last you through the rest of your life.
This is where FIRE comes in. It stands for Financial Independence and Retire Early where you increase your rate of savings so that you can build up a large enough portfolio to retire early.
There are only two ways you can increase your savings rate. The first is to increase your income and the second is to cut down your costs.
Cutting down your expenses is something that you can only do up to a limit, and that can be a finite game, whereas with increasing your income, there is no ceiling, you can work to add multiple sources of income. But what you need to understand is that you don’t need to let one go for the other – you need to have a good combination of both.
At its most basic level, the goal of the FIRE movement is to get to a point of independence where you have enough money to take care of your needs which will give you the freedom to pursue your passions and decide how you want to spend your time.
There are a few issues with the FIRE movement as well and we have covered this in our YouTube video in greater detail. Check out the link below to find out a little more!