Millennials want to live on the fast lane. But they also want to retire early. How does that work?
What Does FIRE Mean?
According to Wikipedia, Financial Independence and Retiring Early is a movement where people strive to retire early by living a simple life or generating secondary and passive streams of income.
When Can You Call Yourself A ‘Financially Independent’ Person?
If your net worth is 25x your annual expenses, then you’re considered financially independent. Let’s say that your expenses come to ₹14,000 per month which means you have annual expenses of ₹1,68,000. If your net worth (1,68,000*25) is ₹42,00,000, then you are considered to be a financially independent person.
The Rules Behind Fire
- Always spend less than you earn and have another source of income.
- Do not keep your cash idle. Invest them properly in mutual funds.
- Practice frugality wherever possible.
What Are The Steps To Reach Fire?
Find Your Why: If you know why you want to retire early, then that would act as a driving force for you.
- Is it because you want to quit your 9 to 5 job and pursue your passion?
- Is it because you want to change your career path and do something that you wouldn’t be able to do if you still had a 9 to 5 job?
- Is it because you want to get more vacation days from your work?
Determine Your Path: After finding your why power, sit down and make a detailed plan on the best way of achieving FIRE. Write a detailed plan of when you are planning to retire; how and where should you be investing to achieve your goal?
Track Your Expenses: When you start tracking the smallest of the small expenses, then, you would be able to make a better plan on how to control your impulse purchases and how you should alter your lifestyle in a way it helps you to achieve FIRE.
Budget Properly: Once you are done tracking your expenses, you would get a clear idea on where all your money goes. Always allocate some amount in your budget for unnecessary purchases as well. Don’t think that everything should be followed in a strict manner because nobody is roaming around with a rule book.
In conclusion, find your why power, take it at your own pace and don’t forget to enjoy the journey because at the end of the day, that’s more important than anything else.
