Do you have what it takes to achieve the FIRE lifestyle?
/A reflection on the FIRE lifestyle
If you were to ask 10 random people on the street "would you like to have enough money to never need to work again?" I'd expect all 10 people to answer with a resounding "umm, YES!"
But the sad truth is that most people will not achieve that status until very late in their lives (if ever). The reason is agonizingly simple: it takes self-discipline and sacrifice.
Sacrifice comes in different shapes and forms. Everyone doesn't need to make the same sacrifices to achieve financial independence, but anyone who wants to get there will need to make some (unless you win the lottery!).
Typical sacrifices those seeking FIRE (financially independent, retired early) might need to make:
- Work more hours to earn more income
- Spend more time commuting to save money on living expenses
- Cut entertainment or other "unnecessary fun" from spending budget
- Skip or go on cheaper vacations
- Spend more time doing things for themselves (i.e. cooking at home instead of eating out, cleaning the house instead of hiring a housekeeper, or fixing a leaky pipe instead of calling a plumber)
Here's the kicker.
In today's world, nobody wants to make sacrifices, even if they are short-term in nature. The world has become a place where we can get almost anything we want...instantly! We have never had greater access to information, communication, FOMO, or an endless supply of funny cat videos.
Stop laughing at the cat and keep reading the article!
It can be extremely difficult to stay the course when the benefits don't impact our lives for years, let alone decades. The distractions and opportunities for instant-gratification are truly infinite.
For that reason, I would argue that it takes more self-discipline to achieve financial independence today than it ever has before.
Related: I'm totally handling my quarter life crisis...probably
You can't "hack" your way to financial freedom (not legally, anyway)
The next logical question is, "what does it take to get there?"
A lot of "lifestyle" and "hacker" sites will tell you that it's easy! "By following these 5 simple steps you will become rich, just like me!"
If it were really as simple as following a few steps, we would all be there already.
What many people fail to realize is that the hard part is not the process. The hard part is the unwavering mindset, dedication, and sacrifice that it takes to follow the process for years!
It doesn't matter how many "7 Easy Steps..." lists we read. What matters is how effectively we integrate those steps into our daily lives.
There are no quick fixes; only constructive habits.
Related: Take a page from Nic Cage: How to avoid overspending
The FIRE mindset
- Planning—thinking ahead is a requirement. No one got rich by thinking about the past...people get rich by thinking about the future.
- Dedication/focus—it takes years to become financial independent. For most, it takes decades.
- Perspective—it's so easy to get sucked into lifestyle inflation or to mindlessly spend on stuff that doesn’t even make us happy. Those who follow FIRE take the perspective that they already have what they need, and there’s no point in competing on lifestyle.
- Vision—what is the bigger goal? Why do you want to take control your time? Is there a project you want to work on? A skill you have always wanted to learn? A place you have always wanted to live? Whatever it is, keeping that vision at the top of your mind is the best motivator to staying on track.
- Independent thinking—what's FOMO? Those who want to break away from the traditional path have to separate their lives from other people's expectations. Social media has made this a very difficult task.
- Willpower—above all, those seeking FIRE believe that they will do it. Part of this is getting educated on the principles/mathematics to make it happen. Another part is believing in the process. And the most important part is having the dedication to follow through.
Related: How to be a star performer
Is the FIRE mindset worth it?
Honestly, there's no other way I would want to live.
Looking back, it's clear to me that I have been striving for financial independence my entire life.
And it's not because I want to stop working! Quite the opposite, actually. It's because I want to work on projects that are closely tied to my passions, interests, and missions.
When I first started working in investment banking at one of the world's largest banks, my goal was to earn as much as possible and SAVE as much as possible. I realized quickly that the constant 80-hour workweeks would take a huge toll.
Fortunately, working in Finance has been extremely rewarding. That's why I would classify myself today as FSWO: Financially Secure With Options (yes, I made that up)!
I'm certainly not financially independent. But I have amassed nearly 5x my annual expenses in one of the most expensive cities in the world, while in my mid-20s.
What are my options?
- I could take more professional risks
- I could take a gap year to re-charge or build up side-hustles
- I could find a low-stress job and take back my free time
- I could move to a lower cost of living area and multiply my spending power
Related: Should you run away from expensive cities?
I'm about to get cliche, but I don't even care. Cause now I'm excited! You only get one life—so why spend most of it doing something you don't want to do?
That's why I have saved nearly 50% of my income for my entire working life. It was never in the name of "FIRE" but it was always with the goal of detaching myself from the burden of needing a salary.
And that's where I stand today. FSWO. Dedicated. Disciplined. Constantly re-evaluating my options. Ready to pivot.
Is Lasik surgery a good investment? I have (well, I had) terrible vision. When I'm not wearing my contacts or glasses, I can't tell how many fingers you're holding up from 3 feet away. Now I can see perfectly. The outcome has been miraculous. But is it a worthwhile financial investment?