Fireworks vs FIRE
The former causes your dog to need anxiety meds, while the latter is taking over Reddit forums. FIRE stands for Financial Independence, Retire Early, and the movement has set the internet abuzz over the past few years. Not surprisingly, we have some thoughts:
Pros
Makes Money Part of the Discourse
Women, in particular, are acculturated to never talk about their personal finances unless it’s in relation to consumer spending (see “Women Be Shoppin” memes), which contributes to the ongoing gender pay and wealth gaps.
Facilitates Goal Setting
Is there any better feeling (albeit perhaps fleeting) than setting a goal and hitting it?
Increases ⬆️ Individuals Savings Rate
In 1960, the average personal savings rate was 10.4%. In May of this year, it was 4.5%. For those of you not reading this letter with Excel open, that’s an approximate 56.7% DECREASE (down arrow). While there are also some systemic factors at play behind these rates, generally at Filuent, we’re in favor of people having strong personal savings.
Mindful consumption
If you’re reading this blog, we have a general sense of your wardrobe and purchasing habits. No judgment. May the person among us who has not over-ordered on Amazon and then missed the return window cast the first stone.
Cons
Rigidity
FIRE can be like a crash diet for your finances. It sounds great at the beginning but by day three when you’re craving some [insert verboten food], and go back to your old habits without making any sustainable lifestyle changes. If you’ve made it this far in life without being personally affected by SnackWells or the South Beach diet, we applaud you and are genuinely envious.
Incompatibility with Evolving Lifestyle
FIRE may sound great to a single 22-year-old recent college grad with no debt, but their future partner may not want to live in the same studio apartment for the rest of their days. Moreover, what happens to one’s well-laid plans if you get married, have kids, or adopt some fur babies? Because, NEWS FLASH, those initial numbers won’t be sustainable.
Loooong time horizon
If you want to withdraw $40k per year, you’ll need $1M invested to reach FIRE. That takes a lot of time, and a lot of sacrifices.
You’re retired. So now what?
If you’ve never worked to identify what makes you tick as a person outside of your 9-5, retirement’s going to feel empty.
Numerical goals are great but at the end of the day without connection and joy, what good is retirement?
What’s Next?
Filuent can help you streamline and simplify your finances to live your wealthy lives now and in the future. Sign up for your complementary 30-minute introductory call to see if we would be a good fit to work together.
Know someone else on a financial journey who could use our help? Please send them our way.