What is the FIRE Movement (Financial Independence Retire Early)?
The FIRE (Financial Independence, Retire Early) Movement is rooted in the belief that a frugal lifestyle will buy freedom. FIRE recommends saving 50-70% of your income so you can retire in your 30s and 40s.
But if you’re spending all your time working and saving but don’t allow yourself to play every once and while, are you really living?
Once upon a time, Americans left for work in the morning, returned home in the evening, ate dinner with their families, watched the evening news, then went to sleep. This process would repeat in a Truman Show-esque cycle until they turned 65, at which point, enough corporate ladder climbing would’ve enabled them to retire.
It was a simple life, but times have changed, and now it’s 2023.
The most significant personal finance trend for 20 and 30-somethings today is the FIRE movement, which is not new, fresh, or effective. While it may have worked in the past, it’s not necessarily the best approach for the current generation.
What is the fire movement?
The FIRE movement (Financial Independence, Retire Early) movement, has been labeled by its iconoclastic adherents the “ultimate life hack,” but its essentially a modern recreation of the advice our parents gave us 30 years ago: “work hard, save all your money, retire comfortably one day.”In other words, it’s like Pepsi’s new “Starry” soda that may have a new label, but it’s essentially just 7UP.
At Stash Wealth, we are wary of anyone promoting “life hacks” especially when it comes to personal finance. Let’s take a deeper look at the philosophy behind the FIRE movement and challenge some of the narratives that are rooted in it.
The origins of [Financial Independence Retire Early]
Vicki Robin and Joe Dominguez published a book in 1992 called ‘Your Money or Your Life” which emcouraged readers to enjoy hobbies and spend time with loved ones during retirement instead of working into their 60s to continue earning money. The book aimed to free people fro consumerism and educate them on the advantages of simple living, suggesting that aggresive saving is the path to happiness. This is the belief that supporters of the FIRE movement often promote.
While Your Money or Your Life fueled momentum as a grassroots movement, it wasn’t until 25 years later that the FIRE movement truly took shape. And that should tell you something about the novelty (or lack thereof) of this movement. 25 years ago, our parents lived by the ideas that you shouldn’t lease a car, that renting was the equivalent of throwing money away, and that you should always over-save for retirement. See what I mean? 7UP rebranded.
Goals-based, guilt-free investment philosophy
The philosophy behind the FIRE movement often revolves around the idea that American greed and consumerism have led us to purchase things we don’t actually need. I’ve trained all Stash Wealth advisors to believe in the importance of conscious spending and the prioritization of what matters most to our clients. However, unlike FIRE, we emphasize spending guilt-free, rather than foolishly. We recognize that automating your finances will simplify your life, but we also encourage you to define what “living your best life” means to you.
WHAT dOES iT tAKE tO bE fINANCIALLY iNDEPENDENT, rETIRE eARLY?
The FIRE movement is rooted in the belief that a frugal lifestyle will buy freedom. They recommend saving 50-70% of your income so you can retire in your 30s and 40s, and while saving more than half your income for the next twenty years could result in an early retirement, it prompts an important question: “Who the f*ck wants to do that?”
Why prioritize saving money over enjoying life?
That seems to be the core belief of the FIRE movement, which advocates achieving financial independence through higher income and lower expenses. However, adherents of FIRE often have to sacrifice personal values and interests to achieve financial stability.
The goal of the Fire movement is to rely solely on savings and investment dividends to sustain ones’s lifestyle for the rest of their life. This requires significant lifestyle changes and a focus on accumulating wealth rather than enjoying the present movement.
Why Stash Wealth doesn’t pLAY wITH fire
If you prefer analyzing data on a computer screen to relacing on a tropical beach. the FIRE movement may appeal to you. However, we at Stash Wealth don’t believe in budgeting methods, adn we see FIRE as an extreme version of that approach. Instead, we recommend the Reverse Budget, which we believe is a more effective way to achieve your goals and prepare for retirement.
Comparing Reverse Budgeting to the FIRE movement, it can feel like you're forced to make a trade-off between enjoying your youth and sacrificing the present for a potentially more comfortable future. It's like having to choose between basking in the sun at its peak or being stuck in a hole of all work and no play for the next twenty years, only to emerge when the sun begins to set.
All work and no play makes jack a dull boy
When comparing Reverse Budgeting with FIRE, it becomes clear that you have two choices: enjoy your golden years while you can or sacrifice your present for a potentially more comfortable future. We believe in the proverb “all work and no play makes Jack a dull boy” and think that a life without enjoyment is not worth living.
Consumerism can lead us to spend money we don’t have. However, unlike FIRE, we don’t believe in sacrificing lifestyle for the sake of saving.
The Stash Plan is our flagship product, designed to provide Millennials and Gen Z with a personalized financial roadmap to prepare for their future while living life to the fullest. Unlike the retirement saving model of the FIRE movement, we don’t advocate for setting aside 70% of your income for the future, as be we bleive that life is happening right now, and you should enjoy it to the fullest.
Don’t miss out on living your best life now for an uncertain future. Take the HENRY Quiz™ today so see if you qualify for a Stash Plan, a personalized financial roadmap that enables you to live life to the fullest and spend your hard-earned money on the things you value most.
To hear more about our thoughts on the FIRE movement, check out our feature in Fortune Magazine.
Stash Wealth provides financial plans designed to assist high earning young professionals build and manage their wealth.
Stash Wealth offers a pragmatic approach to financial planning and wealth management. Whether saving up for Tahiti or a Tesla, we help you achieve your short-term and long-term goals.
Written by Priya Malani
Stash Wealth, Founder & CEO
Priya is a force in the personal finance space. As an industry disruptor, she specializes in bringing the unapproachable world of money to young professionals across the country.
