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The FIRE movement was largely popularised by the 1992 book "Your Money or Your Life" by Joe Dominguez and Vicki Robin. The book introduced the idea of transforming an individual’s relationship with money and advocated for financial independence through mindful spending and investing. In the years that followed, the concept gained traction, especially among millennials, thanks to the rise of personal finance blogs (which are mostly not as good as this one…) and online communities that shared success stories and strategies. 

 

The movement saw a significant surge in popularity during the 2010s, driven by economic uncertainty, student debt crises, and a growing desire for work-life balance. Growth was also fueled by increasing access to online resources, the ease of discussions on social media, and a cultural shift towards financial literacy and independence, inspiring many to pursue aggressive saving and investment strategies in pursuit of early retirement.

 

Today, FIRE encompasses various subcultures, each with its own approaches and philosophies, reflecting a broader shift towards financial literacy and personal empowerment.

 

There are a few key ideological principles of FIRE, which revolve around disciplined saving, wise investing, and lifestyle choices. One of the most important is frugality. Frugality plays a crucial role in FIRE, as it allows individuals to significantly reduce their expenses, enabling them to save a larger portion of their income and accelerate their path to financial independence, while also fostering a mindset that prioritizes intentional spending and financial discipline.

 

The frugality mentioned above should then allow you to save a significant portion of your income. Saving is essential in the FIRE movement, as it forms the foundation for accumulating the wealth necessary to achieve financial independence, allowing individuals to build a substantial investment portfolio that can generate passive income and support their desired lifestyle in retirement. Generally, FIRE will see you save between 50-70% of your income. If that sounds like a lot, it’s because it is - FIRE isn’t easy! I go more into the financials and the pros & cons later. 

 

Good investment strategies are crucial for FIRE, as they enable individuals to grow their savings over time, allowing for compound interest to work in their favor, and ultimately providing the financial security needed to sustain their lifestyle throughout retirement. The investment strategy that’s right for you will depend on the type of FIRE you look to do, which we’ll look at in more detail next. However, some general strategies include investing in low-cost index funds, dividend-paying stocks, or real estate.

 

Finally, minimalism is important in the FIRE movement because it encourages individuals to focus on meaningful experiences that will add genuine value, rather than material possessions. This mindset will ultimately reduce expenses, which aligns perfectly with the goals of achieving financial independence and early retirement.