What is FIRE

FIRE is short for Financial Independence, Retire Early. The concept comes from the vision to be financially independent and retire earlier than the expected retirement age. Being able to retire before the expected retirement may require a rigorous savings plan, cultivating additional income streams, and strong money management skills.

The different types of FIRE

There are many variations of FIRE but fundamentally speaking there are 2 types: Lean and Fat FIRE. Other variations will be fall somewhere between these 2 types.


Retire without altering your current standard of living. Fat FIRE requires the most aggressive saving and investment strategies of the 2 types of FIRE. A fat FIRE will require a higher savings rate than lean FIRE simply because the lifestyle usually involves higher expenses overall.

In this scenario you will enjoy greater flexibility, freedom, and financial protection because of the financial capacity you have accumulated.


Live a minimalist lifestyle having cut expenses to the bone in retirement. A strict savings plan is still needed although less than if you were to achieve fat FIRE.


Imagine the lifestyle you seek to have. A luxurious living likely means fat FIRE is what you going for. The rate of savings together with the type of FIRE will determine how early you can retire.

Try to outline the expenses you expect to have. Separate them into 2 categories: Fixed and Variable. Fixed expenses generally stay the same every month rent or utilities bills. Variable expenses are the ones that go up or down from month to month, examples of this can be restaurant visits or travelling. How much would you generally for each year? Remember to take into account inflation over time.

Certain areas like New York, London, and Los Angeles, can mean high living costs usually in the form of rents higher than the national average. Is your plan to live in a big city in retirement or do you prefer living in a quiet suburb? This is different for each individual and regardless of the preference, this has a big effect on how you can achieve financial freedom and enjoy retirement.

Not for everyone

FIRE is not for everyone as it can involve drastic lifestyle in the short- to medium-term of your living. Besides the financial argument for whether FIRE is for you, think about whether you would be more happy if you were to stop working at an early age. It is entirely possible to love your workplace.

Going back to the financial part, the repeated sentence of “never too early to start saving” quickly comes to mind. Starting early with putting money aside for the future makes a huge difference. The law of compound interest explains the effect of how money can grow over time with minimal effort from your side.

How do I achieve financial independence?

Financial independence can be achieved in a number of ways and will be a combination of income generation and money management. I mention money management because keeping a healthy balance between money coming in versus money coming out is the key to building the financial security needed to retire early.

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