Financial independence, retire early: this is FIRE. A goal for many a millennial has become a rallying cry for those who don’t want to wait until their golden years to enjoy life. The question is, how do you go about achieving your FIRE goal? As always, I’m glad you asked, dear reader.
Here are my top 5 tips for someone trying to achieve their FIRE goal
- Set a goal: The first step to achieving your FIRE goal is to set a goal. Feels like a duh moment, but you can’t make a game plan without an endgame. What do you want to achieve? Retirement by 35? 40? How much money would you need to live comfortably? Once you know what you want to achieve, you can start to develop a plan to get there.
- Create a budget: A budget is a plan for how you will spend your money. It will help you track your income and expenses, and it will help you make sure that you are on track to achieve your FIRE goal. There are many different ways to create a budget, so find a method that works for you.
- Invest your money: One of the best ways to grow your wealth is to invest your money. There are many different ways to invest, so find a method that fits your risk tolerance and investment goals.
- Live below your means: One of the most important things you can do to achieve your FIRE goal is to live below your means. This means spending less money than you earn. It can be difficult to do this, but it is essential if you want to reach your financial goals.
- Be patient: It takes time to achieve your FIRE goal. Don’t get discouraged if you don’t see results overnight. Just keep saving, investing, and living below your means, and you will eventually reach your goal.
There are a few obstacles that can make it difficult to achieve FIRE
Now, we all know you can’t have such a lofty goal without some pitfalls. These are really no different than everyday financial roadblocks in America but they’re no less important to review.
- Lack of knowledge: If you knew better, you’d do better. We know this but not everyone has the knowledge or resources to learn about FIRE and how to achieve it. There are many books and websites that can provide information, but not everyone has access to these resources.
- Lack of discipline: It takes discipline to save money, invest it wisely, and live below your means. Not everyone has the discipline to do this, especially when there are so many temptations to spend money. This is where therapy can be a powerful tool. Understanding your relationship with money may help you work out discipline issues you have with saving/investing.
- Lifestyle changes: Achieving FIRE often requires making lifestyle changes. This may mean working longer hours, cutting back on spending, or moving to a cheaper area. These changes can be difficult to make, especially if you are used to a certain lifestyle. This is why it’s important to be honest with yourself and make your goals reasonable.
- Unexpected events: Even if you have a well-planned FIRE strategy, unexpected events can derail your plans. These events may include job loss, illness, or a natural disaster. This is the hardest blow to take. All you can do is acknowledge, accept, and adapt to your new circumstances and get back on track.
If you are interested in achieving FIRE, it is important to be aware of these obstacles. The best tool against them is being honest with yourself. Trying to go beyond your means is the EXACT opposite of how you hit those FIRE goals.
Yes, there are disparities between genders and races when it comes to achieving FIRE. These disparities can be attributed to a number of factors
Along with the aforementioned obstacles to achieving your FIRE goals, there are some more specific issues. These institutional obstacles target particular groups and stand as a wall between them and lighting that FIRE. Let’s take a look at a few.
- Gender pay gap: Women earn less than men for the same work. Less money gives you less to invest thus handicapping your ability to follow the way of FIRE.
- The racial wealth gap: The racial wealth gap refers to the difference in wealth between white people and people of color. This gap is due to a number of factors, including historical discrimination and current-day economic inequality. Combine this with the latter two issues and it is quite obvious why BIPOC face greater difficulty in achieving FIRE.
- Lack of access to financial education: Not everyone has access to financial education. This can be due to a number of factors, including lack of access to quality schools, lack of affordable financial education programs, and lack of role models who can provide financial advice. See my previous “if you knew better, you’d do better.” One cannot pursue opportunities they don’t know exist.
- Lack of access to financial resources: Not everyone has access to financial resources. This can be due to a number of factors, including a lack of affordable banking services, a lack of affordable investment options, and a lack of access to credit. This is one I believe many people don’t consider. Having a bank account, investment account, or credit is not a given.
However, there are a number of things that can be done to address these disparities.
There is a light at the end of the tunnel! As we like to be solution-oriented, here are a few ways we can turn the tide on these institutional roadblocks and balance the scales for all.
- Closing the gender pay gap: This can be done by passing laws that promote equal pay for equal work, educating employers about the benefits of equal pay, and holding employers accountable for pay discrimination. This requires people to communicate. Unless we know each other’s experience and speak up when we see something wrong, we can’t see this change.
- Closing the racial wealth gap: This can be done by passing laws that address historical discrimination, providing affordable financial education to people of color, and providing role models who can provide financial advice to people of color. This is why representation matters. Seeing people who look like you achieve success lets you know you can too. Sharing the sauce like many financial influencers do gives people the blueprint to find success.
- Providing financial education to everyone: This can be done by providing financial education in schools, providing affordable financial education programs, and providing financial education through community organizations. Because, let’s be honest, how to balance a checkbook and create a budget should be a part of public school curriculums.
- Making financial resources more accessible to everyone: This can be done by providing affordable banking services, providing affordable investment options, and providing access to credit. I mean, why wouldn’t you want everyone to have access to these things. . .unless you don’t want everyone to win (gasp).
By taking these steps, we can help to close the gender pay gap, the racial wealth gap, and the gap in access to financial education and resources. This will make it easier for everyone to achieve FIRE.
The Bottom Line
We all know knowledge is power. Now that you know what FIRE is, the obstacles between you and achieving your FIRE goals, and how we can make it easier for future generations to do the same you’re better than you were when you found this article. May you take this knowledge and achieve more than you ever thought you could for yourself and those around you. Never forget, you deserve it. Now go get it!