At Ironbark Wealth Advisers, we’ve seen our fair share of viral investment strategies. At the moment, F.I.R.E Investing has become a popular topic. So what is it? Many of us dream about how sweet life will be once we retire—we’ll be able to sleep in, finally fix everything around the house, and read as many books as we want. But everyone knows you must keep working until your 65, right? Unfortunately, only half of all working Aussies like their jobs, making those long years toward retirement arduous and boring. And for those that eventually get there, they’re at an age when they’re too tired and sore to do the things they always wanted to.
However, there are some people who reject the ‘normal’ age of retirement and are determined to retire young, hoping to live the life they want in their early 30s and 40s. It sounds like a fantasy, but these people are dedicated to achieving it, making them part of the rising F.I.R.E movement (Financial Independence, Retire Early).
If you feel you can save aggressively, stop spending money on unnecessary things, and create ways to make more income, then you might be able to live like a F.I.R.E follower and retire earlier than most people can hope for.
Cut down expenses to the bare-bones necessities
Most people have a car, a wardrobe full of clothes they rarely wear, and things they collect over the years. Everything adds up, and if you include going out for dinner every week or buy daily coffees from a cafe, the expenses pile high and might eventually eat into your savings. For many people, though, this is the lifestyle they want and work for. However, with F.I.R.E followers, a lifestyle like this is something they willingly sacrifice to retire early.
If you think this is something you want to achieve too, then focus on cutting or eliminating:
- Unnecessary or secondary vehicles: Save on insurance, registration, and fuel. Purchase a cheap scooter instead, or ride a bike or public transport.
- Designer clothes: Buy clothes from generic brands or thrift shops. Designer clothes are expensive and the difference in quality is not worth the price according to F.I.R.E followers.
- Going out regularly: Make food at home instead of going out. Save and invest the money you’d spend on expensive meals instead and make food in bulk to save further.
- Live in expensive areas: Buy or rent in cheaper areas. Moving further from the city is usually cheaper and offers more land and quiet from the noise of traffic. Take into consideration how far you’re willing to commute to your workplace and if you can get there with your scooter, bike, or public transport.
Put 60-70% of your income into investments
Another thing F.I.R.E followers sacrifice is 60-70% of their income. They put it all into investments and only allow themselves to access it once they have reached that $1 million mark, or around 30 times their yearly expenses. Most followers choose to take the money out at a steady rate, leaving them enough to live on for years to come. Some also choose to live off the dividends from their investments.
For the average person, putting aside more than half their earnings is not possible. For some, it’s impossible, especially with rent and bills constantly increasing. So, you need to consider if you can put aside a sizeable chunk of your income and still be able to make ends meet.
Increase your income
You can cut expenses as much as possible, but sometimes it’s just not enough. You still need to live, so unless you have a high-paying job, you’ll need to make a little cash on the side.
Find ways to increase your income and bring you closer to early retirement. These can include:
- Taxi or Uber
- Food delivery
- Sell crafts on Etsy
- Do odd jobs in the community
- Online surveys
- Provide services on Fiverr or Upwork
- Start a business
- Renovate and sell homes
- Write an eBook
These tips can get you started right away, otherwise, you can take courses or read books to learn how to do jobs that people want to pay you for. There are endless ways to increase income and help you achieve your goal of quitting your job and living the life you want.
Is F.I.R.E right for you?
As good as the F.I.R.E movement sounds, it’s certainly not for everybody. It requires sacrifices to save large sums of money in a short amount of time. But those that can do it are rewarded with a work-free life and can choose to spend it taking up hobbies or spending more time with friends and family.
Another thing to consider is if you’re doing it just to leave a job you hate. If so, F.I.R.E can’t help you find fulfilment during your working years. It’s better to work on a side-hustle and build it up enough to quit your primary job, or make a career change, than to work in a job you dislike and work toward early retirement.
At Ironbark Wealth Advisers, we provide customised financial strategies to help you achieve and preserve your wealth. Call us now on 02 6884 4680 and find out how we can help you reach your goals sooner.
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