Is it possible for you to reach financial independence? For many, the idea seems like a pipedream. It can be hard to visualize saving enough to last you past age 65—let alone saving enough to retire earlier than that. But reaching that independence is actually more attainable than it may seem. The Financial Independence, Retire Early (FIRE) movement is driven by people living frugally to reach their financial goals. In this week’s episode, Scott Frank, founder of Stone Steps Financial, and Meg Bartelt, founder of Flow Financial Planning, LLC, answer how one can achieve FIRE and what take actually means for your daily life.
The FIRE movement promotes a lifestyle of extreme savings and investment that allows for early retirement. It's a concept that has gained traction—particularly within the tech industry. With so many employees searching for ways out of the industry’s daunting expectations, reaching FIRE is a way for them to get back to enjoying life. However, as Scott and Meg point out, reaching the point where work is optional requires careful planning and a solid understanding of investment growth through compounding.
Compounding can be considered a long (and prosperous) waiting game due to its ability to transform investments over time into substantial wealth. This concept is central to achieving financial independence, as it can significantly accelerate the growth of one's savings. For instance, even a small amount invested at age 35 can, with a decent rate of return, grow exponentially by retirement age. This forms the basis of what is known as 'Coast FIRE,' a strategy where individuals can essentially 'coast' into retirement if they've accumulated early enough.
Coast FIRE falls into the spectrum of FIRE. Financial independence can mean something different depending on your life circumstances. For those just starting out, having enough extra cash flow to start an emergency fund may make them feel more independent. As you grow, that independence may begin to look more like you only have to earn enough to pay your taxes and bills since your retirement is already covered. Achieving FIRE is a personal goal.
Financial planning is not solely about numbers; it's about finding a balance between enjoying the present and preparing for the future. It requires trade-offs and a personal understanding of what brings joy and fulfillment. Scott and Meg encourage listeners to align their financial goals with their values, which often leads to a more satisfied life, both now and in retirement. It’s not impossible to reach FIRE, you just need to have a clear definition of what that means to you.
Key Takeaways:
Understand the FIRE Movement: The Financial Independence, Retire Early (FIRE) movement emphasizes extreme savings and investing to achieve early retirement. It requires careful planning and discipline to make work optional.
Leverage Compounding for Growth: Compounding can significantly boost your investments over time, helping you build wealth and achieve financial independence sooner.
Explore Different FIRE Approaches: There are various FIRE strategies, like 'Coast FIRE,' which focuses on saving enough early on to let your investments grow and cover your retirement.
Align Financial Goals with Values: Balancing present enjoyment with future preparation is key. By aligning financial goals with personal values, you can find satisfaction in both your current lifestyle and retirement plans.
Ready to learn more?
Scott Frank on LinkedIn
Meg Bartelt on LinkedIn
Stone Steps Financial
Money can be confusing—but it doesn’t have to be. When you’re able to understand the complexities, you can make better decisions to improve your daily life. Are you ready to align your money with your ideal life? Connect with us at Stone Steps Financial.
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