The term FIRE has gained popularity in recent times. For those of you who haven’t heard it before, it stands for – Financially Independent, Retire Early. Many articles are being published on what it means and what one should do to be part of this “elite” community. Speaking to a few millennials made me realize that it definitely has caught that generation’s imagination.
At the core, FIRE is about becoming financially free. I have written about becoming financially free before (here is the link), hence wont go into it again. Suffice it to say that becoming FIRE is not an event or an end-point in itself. In fact, beyond a certain stage in your personal financial life-cycle (having successfully planned for all financial goals and still having money to spare), it is an enabler to a different way of life. Let me explain.
Becoming FIRE is not at all about having a target pot of money and spending all one’s energies saving, investing and managing it. That would defeat the purpose of attaining that status. It is about identifying what one wants to actually do and how much minimum money does one need to move on to actually living one’s life the way one wants to.
Hence importantly its about 2 things –
- Stripping and clarifying your finances to a level where one is clear what is a must and what is not, so that it keeps you happy, while not dependent on money.
- Being clear about what one wants to do in one’s life. Everyone has their passions, secret desires that one would life to fulfil. Dare I say, every one of us has our own stories about “what I would do if I had enough money”.
The starting point to becoming FIRE is to actually know what one wants to do and where one wants to be financially to achieve that purpose. Everyone’s needs and wants are different and everyone therefore needs a different amount of money to reach FIRE status. One only needs to remember that the purpose at the core should be something that gives you immense happiness, and beyond a point, “there are many things in life that money still can’t buy”.
Also read this nice article by Mrin Agarwal in Mint about some of the checks and safeguards that people in FIRE status also need to have, while living their life.