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What is the FIRE Movement? Ultimate Guide


Elliot Kavanagh

Elliot is the owner and admin of He's a qualified marketing expert with a Bachelor of Business in Marketing and 7 years of experience in digital marketing. He also loves to eat and play games, somewhat badly.View Author posts

Have you been hearing of this thing called FIRE lately? If you’ve been looking into saving money and getting better at managing your finances, you’ve probably heard of the FIRE movement. But what is the FIRE Movement?

Well, F.I.R.E. is in fact an acronym for Financial, Independence, Retire, Early. Although retiring early is in the name, FIRE may not necessarily be used to retire early.

There are different types of FIRE which we will discuss later. Let’s take a detailed look into what exactly FIRE entails.

What is FIRE?

FIRE is a movement of people who dedicated their lives to strictly saving and investing their earnings. Typically, proponents of FIRE would invest up to 70% of their earnings.

To cut back on expenses and living costs, they embrace living frugally and not spending money on unnecessary things.

The ultimate aim of FIRE is financial independence and early retirement. You may often hear of people saving and investing 70% of their earnings throughout their 20s and retiring in their 30s.

This was the traditional goal of FIRE when it first began. However, the FIRE movement has changed over the years.

People are looking at it differently now. They are embracing the extreme savings and investing element of it but not necessarily using it as a tool to retire early.

Instead, they are saving and investing aggressively to become financially independent at a much faster rate than typical saving plans would allow.

Interesting Fact: The idea of FIRE came from the book, Your Money or Your Life written by Vicki Robin and Joe Dominguez.

Types of FIRE

As mentioned previously, people are using FIRE differently. It truly comes down to the individual and what means they have to save and invest.

These are the three types of FIRE:

Lean FIRE: The Lean FIRE method favors living very frugally and aggressively saving and investing as much as possible in order to retire as early as possible. Lean is the strictest of the FIRE types and requires a very restricted and minimalist lifestyle.

Fat FIRE: Fat FIRE is less strict than Lean and allows for a slightly more indulgent lifestyle. However, because it’s not as strict as the Lean method you typically need a higher salary in order to keep your standard of living while simultaneously saving for early retirement or financial freedom.

Barista FIRE: Barista FIRE is similar to the previous methods in that the ultimate goal is early retirement. However, people retire early to pursue passions, career aspirations or simply work part-time instead of a typical 9 to 5.

Benefits of FIRE

Now that you know what FIRE is and the types of FIRE you can practice. Why do it anyway? What are the benefits of FIRE?

The main benefit is that it teaches you to become more conscious about your spending habits and more mindful about having a retirement fund. Nobody wants to make it to 65 and have to worry about not having enough money to retire.

In fact, 25% of Americans have no retirement savings. This is most likely because they live paycheck to paycheck and aren’t mindful of saving for the future.

A lot of people live paycheck to paycheck not because they don’t make enough money. Instead, they give in to lifestyle inflation. When they make more money they buy more stuff or move to a more upmarket neighborhood.

FIRE teaches people to be more conscious of these financial traps and to practice living a life of minimalism.

However, as mentioned before, FIRE is not only about saving to retire. A lot of people use it to acquire financial freedom much earlier in life.

Is FIRE For Everyone?

FIRE is most certainly not for everyone. A lot of people don’t even make enough money to make ends meat. So they simply wouldn’t have the financial freedom to pursue FIRE.

However, it also depends on the type of FIRE you wish to achieve. For example, the less frugal types such as Barista require one to have quite a high salary because they will be simultaneously saving to retire and living comfortably. In contrast to LEAN where you save vigorously and live frugally.

In addition, it also depends on your current life situation. Someone in their twenties living at home with no children will most likely be able to save a lot more money than a typical middle-class family with four children to take care of.

Fewer expenses make FIRE easier to achieve and it truly depends on your goals at the end of the day. If you are able to save 10 to 15 percent of your salary every month and invest it wisely you can certainly participate in the FIRE movement.

How to Achieve Financial Independence?

Financial independence is achievable for everyone if they put their minds to it. But there are some techniques you can use to make sure you reach your goal.

Create Goals

The first thing to do when starting anything new is to create goals and make a plan to achieve them.

You will have to ask yourself some questions so you know what you want to achieve from FIRE. You should start by asking yourself questions such as do I want to retire early? How much do I need to retire? How much money do I need to save to live comfortably?

There’s a formula people use to find out the approximate figure needed to retire or achieve financial independence.

The first thing to do is calculate your yearly expenses and multiply them by the number of years you wish to spend in retirement.

For example, if you want to retire at the typical age of 65. Here is the formula you would use.

40,000 x 25 = 1,000,000

However, If you’re much younger. For example, you’re 20 years old and wish to retire at 35 years old. Your calculation may look like this:

40,000 x 50 = 2,000,000

Obviously, someone who is younger will need a lot more money to retire early.

The general rule of FIRE is to take your yearly expenses and multiply them by 30. As you can see this falls somewhere between the medium to suit people of all ages.

40,000 x 30 = 1,200,000

This is the general figure you need to achieve financial independence. It’s based on the 4% rule of withdrawing 4% of your balance annually.

Save More & Invest

So how do you get to the figures mentioned above? You certainly won’t get there by saving alone. You should start saving at least 10% of your salary to start.

However, in order to make your income grow and work for you means you have to start investing. Proponents of FIRE often invest in the stock market.

ETFs such as the S&P500 is favored by many in the FIRE movement because it requires very little management and has relatively low fees.

Another great thing about ETFs is that you don’t have to go picking and choosing companies to invest in. The S&P500 takes the top 500 performing companies in the US economy and follows their growth. So you essentially own a little piece of each company.

The average annual return of the S&P is between 8 and 10 percent which is in fact the average return of the stock market.

Like all investments, there is risk to consider. However, in terms of the stock market, the S&P500 is considered the least risky investment.

Live Frugally

Living frugally essentially means cutting back on all unnecessary expenses. If you think about all the things you spend your money on, ask yourself what is really necessary.

Cutting back on things such as paid subscriptions, electricity use, and things that are not essential can really help save money.

The more money you save will in turn add to your savings and investments. This tends to have a snowball effect that builds up over time.

Don’t take on debt

Another important thing to learn when trying to achieve financial freedom is to not take on unnecessary debt.

Lots of people I know take out loans to buy cars and houses but end up being slaves to their creditors. You don’t want to end up like this.

On top of that, it’s really going to eat into your ability to retire earlier. A big enough debt could take years off your retirement goal.

So be patient, live frugally and buy something when you can actually afford it from your own pocket.

Increase Income

It’s something we can all do and we don’t even need that much extra time. There’s literally tones of ways you can increase your income even with a busy schedule, some include:

I suggest you check out the work from home job post linked above. You’ll find over 30 work-from-home job ideas in this post alone.


If you want to retire early, FIRE is certainly a tried and tested way of accomplishing this.

If you’re going to jump right in and join the fire movement. Make sure you are prepared for a whole change of lifestyle and mindset.

You may not be able to go out as much or go on as many holidays as you used to. But keep in mind, you’re sacrificing short-term pleasure for financial freedom in the long term.

You can indulge in all your favorite activities once you’ve accomplished FIRE and have financial freedom.

Remember, you’ll be free to do all the fun stuff when everyone else still has 25 or 30 years of work ahead of them. 😉