The FIRE movement (financial independence retire early) is growing rapidly. It seems like every day there are new media articles being published and new content creators sharing their own experience with the FIRE movement.
I’ve outlined 11 essential FIRE movement tips for you.
Below are financial independence tips that will not only provide you and your family with a richer life but will pay off down the road when you reach your FIRE goal.
1. Learn About the FIRE Movement
It’s important that you begin by expanding your knowledge of financial independence. I would begin with time tested, simple reads like The Richest Man in Babylon.
Reading books and articles from popular gurus like Dave Ramsey, Tony Robbins and the like.
Instead of just going along with the trend, I want you to set goals and choose a FIRE path that makes sense for those goals. These are the 5 most popular types of FIRE.
I found the FIRE movement while reading the personal finance subreddit. It’s a great, self-moderated community of like-minded folks always willing to provide answers, guidance and correct misinformation. There are also some math whizzes on there that can open your eyes to the power of compound interest. knowledge and education is a mindset, it’s out there if you want to learn it.
2. Why are you Considering the FIRE Movement?
Why do you want to join the FIRE movement? Are you looking to be part of a team, or do you want to radically change your future and the future of your children? Not everyone’s why will be the same, some will want freedom, some will want choice, some will want security.
Just like starting a diet or fitness routine, the data says you are more likely to stick with a lifestyle change if you have a strong why.
It’s not as simple as desiring to build wealth. It has to be a deep, intrinsic why. The more you can connect emotionally to your why, the more likely you will stick with it when it get’s difficult.
For me, I want to achieve FIRE so that I may give more of myself, my time, my energy, my passion to improving the lives of other people.
I don’t want to spend my time working a job I dislike, just to make money to pay the bills and look to my children for support. It’s about independence, freedom and most importantly, TIME.
3. Improve your Financial Communication
If you are married or in a relationship, it’s important to get your partner on the same page. They don’t need to be as obsessed as you are about it, but they need to understand what you’re thinking.
They should at least buy into the goal and the path it will take to get there. If you don’t have strong financial communication, taking control of the finances may be perceived as being controlling, bossy, cheap, etc… You should provide the context for your partner and find some common ground.
Communication is a foundation aspect of any relationship. A lack of communication is a major factor in unhappiness and divorce.
Instead of learning how to communicate to your spouse better, try to learn how your spouse communicates to you. Download our Money Marriage Checklist!
4. Combine your Household Incomes
No more his money, her money. It’s the family’s money. The sooner you can wrap your head around that, the easier life will be. For my wife and me, this was never a problem.
Dave Ramsey has always said, “if you can’t combine your finances, you can’t combine your life.” I am a firm supporter of that statement.
When we got married at 19, she had $3,000 in her account and I had a loan out for her wedding ring. We had children young and that has always been our sole focus. It’s helped our marriage more ways than I can count. You can read more about combining finances after marriage.
5. Start an Every Dollar Budget
A budget is a must-have for any family. It allows you to see where exactly your money is going. A lot of people I meet are surprised to discover hundreds of dollars per month just leaking out to random subscriptions, memberships, and fast food establishments.
You can’t fix what you can’t see. By implementing an every dollar budget, you can see exactly how much you make, spend and where exactly that money is going. Budgeting is essential to improving your financial communication and achieving your financial goals.
By using an app like the Dave Ramsey EveryDollar Budget, you can have much more control over your household income which has provided us more freedom and reduced our stress levels.
6. Give Each Other an Allowance
The FIRE movement can cause more problems than it solves if you let it. It’s easy for the interested spouse to get too overbearing and controlling with the money and goals (I know from experience).
It’s important to relax a little and give each other some freedom. Kayla and I have $100 each per month that we can spend on whatever we want, no questions asked. That’s $2400 a year that we are spending, but this keeps us from spending more.
When you get so uptight with your money, people tend to get more impulsive. It’s like binge eating or drinking.
7. Keep Dating your Spouse
It’s important to not let the FIRE movement get in the way of your relationship. Nothing in the world is more important than my kids and my wife.
It’s important to keep a pulse on how everyone is doing. If your budget is too tight, it will be obvious.
We realized early on in our FIRE journey that we need to loosen up the budget a little and plan for regular date nights.
We also plan to go out of town, overnight once every 6-9 months. We recently returned from a marriage retreat and had a really great experience.
Getting some time away from the kids, work and all of our other responsibilities is essential to keeping our marriage strong and focused.
Kayla and I make sure to go on a date at least once per month. We typically just go to a dinner and a local winery that we both like. You don’t have to go out, you can easily accomplish the same thing by staying home. If you have kids, it’s important for your relationship to do something without them for the evening or just even a few hours.
Do little things here and there that tell them you still think of them and are crazy about them. A little goes a long way.
8. Increase your Income
Work hard to continue to increase your income. Either by working towards a promotion at work, getting a few extra sales each month or starting a passive income stream like a blog.
Continue to expand your knowledge about money and how it works. Go back to college if needed.
It’s never too late to get a formal education, my mother-in-law completed her accounting degree in her 40’s and really boosted her income.
I completed my undergraduate degree and MBA before the age of 30. In the past year, I received 2 promotions, increasing my income from $42,000 in 2018 to $70,000 in 2019 and now on track for $90,000 in 2020.
Kayla went from teaching preschool at $14 an hour to be a full-time kindergarten teacher starting at $54,000 per year.
As of Q1 2020 total household income for 2020 is on track to reach $150,000. This is absolutely unbelievable to me, but it’s the result of a lot of work and investing in ourselves and each other.
Here are 22 ways you can invest in yourself.
You and your spouse owe it to each other to continue to improve. Even if one of you stays home, find ways to save and clip coupons or even easier, use the Ibotta App to save money at the grocery store by just scanning your receipt. We saved $256 in the past 6 months using the Ibotta App.
9. Decrease your Expenses
Once you have a budget in place, you should be able to clearly see all of your expenses laid out. Each expense no matter how little. Just like cleaning out your garage for a yard sale, consider what you can and can’t live without. Get rid of everything you don’t absolutely need.
Find your bare-bones expenses. If you were to be jobless tomorrow, what do you absolutely need? Mortgage, food, car payments, etc… This is what you will base your emergency fund on.
One of the largest expenses a family faces has to do with food. Groceries and restaurants can literally siphon money from your bank account. My friend has seen great results in his budget by prepping meals ahead of time.
Once you have your bare-bones budget, determine what your savings rate will be. If you bring home $5,000 after taxes and you need $3,500 then you have $1500 leftover. That’s a savings rate of 30 percent. See just how far you can push this. Right now, we’re at 30 percent (with daycare expenses).
In 3 years when daycare is no more, we will be saving/investing over 50 percent of our income. Use your income and savings rate to determine how long it will take you to reach your financial independence number. Here are some FIRE calculators I recommend.
10. Learn to Invest in Low-Fee Index Funds
Everyone in the FIRE movement loves to talk about VTSAX or the Vanguard Total Stock Market Index Fund. It’s an amazing investment vehicle that gives you broad access to the stock market, diversification and has a very low expense ratio. VTSAX isn’t your only option here are some more.
Not only should you educate yourself on passive investment options, but you should learn about the accounts available to you. Do you have access to a 401k, 457(b), IRA or Roth IRA, TSP, etc…
Before investing in taxable accounts and apps like Acorns, find out what tax-advantaged options you have. For example, I have access to a 401k and a Roth 401k with an employee match through my employer while Kayla has access to a 403b and a 457(b) account (find out why it’s awesome).
If you want to get into real estate investing, consider starting with a REIT like VNQ. It’s a low fee way to invest in real estate you otherwise wouldn’t be able to invest in. It’s diversified across sectors, properties and is a much cheaper alternative than a down payment.
11. The FIRE Movement Requires Consistency
Just like one of my favorite books, The Compound Effect describes, making many small, but correct decisions over time are much more powerful than trying to get that big home run or lotto play.
Compound interest is a powerful force and it’s really a law that governs all of the success. Overnight successes are a myth, typically the person being accused of being an overnight success has been working for many years.
Reaching financial independence requires consistency. It does not require a high income, inheritance or inventing the next iPhone. It does require following through each and every month on all of the points listed above. Month in and month out, you need to be consistent.