How Can I Be Financially Independent And Retire Early?

I love my job. Well, most days at least. Some days I catch myself counting the days until retirement. Being in my late twenties, that makes for a lot more days of work!

Not to sound ungrateful, my job provides me with personal development opportunities, enough money to fulfill personal and financial goals, and treat myself occasionally. But it still takes up most of my days.

I’m part of the group of people who are willing to wait forever for the perfect financial situation to ditch their job. The other part takes the matter into their own hands and builds a strong financial background that will allow them to retire early.

While I consider myself invested in saving, investing, and improving my money management, I could never commit to following the FIRE movement.

F.I.R.E. stands for Financial Independence Retire Early. It’s a millennial movement whose followers save or invest up to 75% of their income to retire early or pursue “deep life” after reaching their savings goal.

What’s The Key To Financial Independence?

What's The Key To Financial Independence?

Our whole life, we struggle to be more independent, not to rely on our parents, partner, or friends. But we’re rarely prepared for financial independence.

Financial independence means your savings and investment gains exceed your living expenses. As a rule of thumb, to be considered financially independent your net worth needs to be 25 times your annual living expenses.

From the day you get your first job, here’s how you can work on your financial independence:

  • Create a budget – tell every hard-earned dollar where to go;
  • Save – allocate a percent of your salary to go towards savings and create an emergency fund;
  • Pay off debt, don’t postpone it. Credit cards, student loans all need to be paid off so you can work for yourself, not for the creditors;
  • Invest, begin with low-risk investments until you dive deeper and learn more about shares and funds.

Only when you learn how to juggle these 4 key points, you will come closer to being financially independent. Financial independence is not a given; you have to give up a thing or two to reach it, but it’s more rewarding in the long run than your average everyday expense.

Create a passive stream of income, live more frugally, upgrade your skills, and determine clear financial goals. Financial independence means not depending on an employer – you can take a job because you want it, not because you need it to pay the bills.

The Basics of FIRE: Financial Independence, Retire Early

The Basics of FIRE: Financial Independence, Retire Early

Financial independence enthusiasts took the idea a bit further and created the Financial Independence, Retire Early concept. Not only they’re financially independent, but they’re preparing for very early retirement.

We refer to retiring early as retiring at 55 or 60, but this is a whole new concept. Individuals save up to 75% of their income in their 20s and 30s and strive to retire before turning 40.

This requires extreme dedication, stable streams of income, and lowering your living expenses. The money saved by lowering the housing costs and overall living expenses is invested in rental properties and low-fee funds.

FIRE demands a stable and more than decent income. If you’re financially blessed, you’re a great candidate. Struggling to achieve FIRE at a low paying job can only make you frustrated and miserable.

Who Came Up With The FIRE Concept?

Who Came Up With The FIRE Concept?

Homo erectus invented fire, but millennials invented FIRE. The idea first surfaces in a 1992 book called Your Money or Your Life by Vicki Robins and Joe Dominguez. Joe explains his journey from work on Wall Street to retiring at 31. By leading a simplified and frugal life, he was able to never again work in exchange for money.

FIRE gained massive popularity around 2010, and partakers created online communities, websites, and blogs. Authors who dedicated their 20s and 30s to reaching FIRE shared their experience and inspired a massive following.

From then on, FIRE looks more attainable, and everyone could learn tips on how to reach it.

Who Needs To Take Advantage Of FIRE?

Who Needs To Take Advantage Of The FIRE Movement?

If you’re working a high-paying job, you don’t enjoy, or you want to pursue your passion in other financially unstable fields, FIRE is perfect for you.

In our 20s and 30s, we can work two jobs, jobs that require more time and don’t necessarily leave us feeling content. Accumulating enough finances to quit a 9 to 5 job to work on something that’s been a passion for years is impressive.

For example, creative jobs don’t often provide enough financial revenue, but you won’t care because you’re financially independent and can retire at any given moment. With FIRE, the opportunities for upgrading your lifestyle are limitless.

You can volunteer overseas, travel the world, spend years working on an autobiography book, or crochet scarves – if that’s what makes you happy and fulfilled!

How Much Do You Need To Achieve Financial Independence?

How Much Do You Need To Achieve Financial Independence?

When it comes to reaching a financial goal, it all comes down to spending less or earning more. The short cut to financial independence combines both.

You can achieve financial independence in 5, 10, or more years, depending on your set goal. The 25x rule suggests you need 25 times the money you spent this year to retire.

The average millennial spent $52,874 in 2018. To be financially independent and retire early, they need 25 times that amount or $1,321,850 to be precise.

Let’s put it into perspective. At an annual income of $45,000, you can reach financial independence:

  • In 14.2 years if your annual expenses are $20,000
  • In 25.7 years if your annual expenses are $30,000
  • In 49.1 years if your annual expenses are $40,000

The time frame mainly depends on your income and where you’re willing to make cuts. FIRE followers are dedicated to decreasing their annual spending and increasing the annual income, reaching $1 million in 8 years on average.

If your expenses are more modest, your total amount is lower; so you can reach the 25x mark faster. This is the part where dedication to your goal is essential.

What is LeanFIRE and FatFIRE?

What is LeanFIRE and FatFIRE?

Lean FIRE refers to the traditional formula for financial independence – saving 25 times your essential annual expenses. Fat FIRE caters to those on the hedonistic style who want to afford more significant expenditures.


The Lean or Vanilla FIRE followers are frugal. They cut all non-vital expenses to reduce their annual spending and save up the amount needed for FIRE faster. Those who choose LeanFIRE are frequently anti-consumerism, meaning they don’t own a car, don’t have expensive hobbies, and maintain a minimalistic lifestyle.

The average LeanFIRE household strives to keep their annual expenses around $40,000, meaning they can retire with $1 million in liquid assets at a 4% withdrawal rate.


Also referred to as Obese or FattyFIRE, it allows its followers to engage in a more comfortable lifestyle in retirement. The total amount needed for FatFIRE is still 25 times the annual expenses, but they’re not kept at a minimum.

Commonly FatFIRE includes $100,000 or more in annual costs. It’s an option for those on a higher income, business owners, or hedonists who don’t want to give up certain comforts.

With FatFIRE, you have full freedom to own a brand new car or enjoy the flexibility to travel whenever, even in first class. Realistically speaking, Fat FIRE is not attainable for those on an average income.

There’s also Morbidly Obese FIRE for those wanting to live on more than $200,000 annually in retirement.

The Downsides of the FIRE Movement

The Downsides of the FIRE Movement

There’s nothing wrong with being financially independent, quite the opposite, but you shouldn’t sacrifice your sanity for a hefty bank balance.

FIRE is too restricting

The main reason people ditch the FIRE approach is the amount of sacrifice it requires. Material things should not play a role in our happiness, but necessary treats and indulgences keep us going at times.

Cutting subscriptions, cable, selling the car, using the cheapest cellphone plans, and skipping dining out might make you miserable. People earn $60,000 a year but still stay living with their parents to save for FIRE.

Spending your 20s and 30s working hard and restricting yourself is not fun at all. You’ll save for retirement but at the cost of your happiness.

FIRE is not invented with the average income in mind

FIRE requires stable and above-average income. If you’re a freelancer or beginner entrepreneur, you might face unstable income each month. FIRE can be another “expense” to add to your financial anxiety.

You can secure a comfortable retirement by contributing to your retirement accounts like 401K, Roth IRA, etc., without sticking to FIRE.

Nobody really retires on FIRE

There are hundreds of bloggers who explain their way to reaching FIRE, but in the end, they’re still working! They have websites they post to regularly, podcasts, and affiliate content that brings them a regular income. So, in the end, FIRE is more of a career change rather than fully retiring.

Bottom Line

Your journey to financial independence needs to be filled with education, patience, dedication, and joy. Flexibility and balance are the keys that will keep you on track.

If you spend more than you make, you’ll wake up one day with no savings, no retirement plan, and no investments. I wouldn’t want to be that person.

On the other hand, sacrificing basic pleasures like Netflix or dining out once in a while to retire early doesn’t work for me. Life’s too short for the average American to save 70% of their income in the name of retiring early.

Switching to a career you love and are enthusiastic about will lower your need to retire early. It will bring you enough finances to live comfortably and save within your means. Doing what you love, upgrading your knowledge, and having a routine contributes to your mental health.

Being financially independent and retiring early sounds like the dream but jump on the bandwagon only if you’re sure you can put in the work!

Have you thought about FIRE? Is it something you could do at this point in life?

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