This brilliant article was written by Dave Gow of Strong Money Australia and has been shared with his permission. Please note: nothing in this article should be considered as financial advice. So do not act on what you read here. I (Owen) am simply a fan of Dave’s writing, so I wanted to share this with you. You can reach out to Dave via his website (see the links in his author bio below the article) or comment/make a FIRE topic in the Rask Core Community.
Those in the Financial Independence Retire Early (FIRE) movement often see things quite differently from the rest of society.
We’re a bit weird like that! Or are we just an advanced version of human? (only half joking lol)
In this post, we’ll run through exactly what the FIRE philosophy is, and how the people following this path typically have a very different mental script to most people.
Despite all the numbers and analysis regularly thrown around, our focus isn’t really on money at all. So let’s get into it.
FIRE Culture
The following is true for many people pursuing financial independence…
We enjoy finding ways to game the system. Not by cheating, but by questioning the normal way things are done. And we find money and investing to be an interesting topic to learn about. Not for the love of money itself, but because it affects our lives in such a way that we can’t ignore its usefulness.
But sometimes, we’re seen in an unusual light. We get called out for our whacky approach to life. For not following the standard approach of working 40-50 hours a week for 40-50 years.
We’re sometimes seen as dreamers, who aren’t in touch with reality. Misguided millennials who’ve never seen real downturns like the GFC, that’ll come crawling right back to the workforce when the next crisis hits.
Or, it’s assumed we’re seen as a bunch of lucky high income earners who can’t relate to the financial realities of the average person.
And we’re often painted as frugal to the point of misery, because we hate working and can’t wait to retire by thirty so we can live in our van, while we dumpster dive for dinner and re-use our toilet paper, as we sit at the beach for the rest of our days.
Okay, I haven’t heard that word-for-word, but it’s often implied! Whatever some say, I think there’s one undeniable life lesson that resonates with most in the FI community.
What’s Our Secret?
It’s this: Time is our most precious resource.
Probably everyone hears this, and to a certain extent they believe it too. But the difference with the FIRE crowd is, we take this to heart in a different way.
Our actions are more in harmony with this belief. We’re working hard now, to create as much future free time as possible.
Over the course of a good life, more of our days are better spent on more valuable things, than being at the office/factory/worksite. And by getting our finances sorted, and money behind us, we’re able to make that belief a reality. Effectively, we’re able to re-allocate our time.
Suppose a two person household spends $50,000 per year. For this couple to fund one year of freedom, it would cost $50,000.
If they’re both working full-time and earning solid incomes, it would likely only take a year or two to save $50,000. This means, for 1-2 years they work, they could take an entire year off.
They’ve just purchased one year of freedom. By managing their money well, they’re able to re-allocate their time and have every second or third year as complete freedom. Pretty incredible.
Of course, an alternative is, they simply work part-time on an ongoing basis, to cover their modest spending. This allows much more freedom on a weekly basis, without waiting a year to save $50,000.
Obviously, there are a huge number of possibilities. But this is just one example of how to think about money and time. As I like to say, you’re not really spending your money, you’re spending your freedom.
Other Important Beliefs
Here’s a list of philosophical views that I hold personally, along with many in the FIRE community. Do you share any of these beliefs?
A high payback job is a better goal than a high paying job.
Reaching Financial Independence allows you to choose your work based on satisfaction, rather than salary. You can do work that means something to you – work that matters, regardless of what it pays, or whether it pays at all. That’s why it’s so helpful to earn well and stack your money first, so you can then move into next phase where you become very selective about work chosen.
Our individual actions do make a difference.
Many people on this path are quite conscientious people. We realise that our habits and lifestyle choices are affecting the planet in either a positive or negative way. Many regular folks feel this way too, but I notice it more acutely in the FIRE space. Perhaps it’s a trait of ‘big thinking’ and seeing the larger picture. It’s a belief that there is always something we can do to improve our situation (whether its financial, environmental or other).
Material possessions and status are pretty empty goals.
Many people are (often subconsciously) driven by these factors, though few will admit it. I certainly was back in the day. But even if we succeed in attaining the level of wealth and luxury we want, it’s unlikely to satisfy us. There is always another level of opulence to reach. Always someone richer than you. Always another way to elevate your lifestyle. It’s an unwinnable game. And that’s why opting out makes sense, because…
Happiness is possible with very little.
How many people around the world are happy with a fraction of the luxuries we enjoy? My guess is somewhere between a ton, and a shitload. So chasing more money to buy more stuff and exotic experiences (as above) is simply unnecessary, and a distraction from actually building a meaningful life with great health, good relationships, and meaningful things to spend your time on.
Saving is what allows you to become rich.
Not through achieving ultra-high returns from investing. Many try and shortcut this by taking on massive leverage or risky bets. And some succeed. But the vast majority of the time, wealth is created by saving money first. The compounding and big investment gains come later. Without first focusing on saving, you’ll never develop the underrated skill of managing money which will serve you for a lifetime.
Taking responsibility gives you power.
Your current situation might not be your fault. But it’s up to you what happens from here. Holding yourself accountable is the only way forward. You’re probably aware that many people are busy complaining about how hard life is, how expensive things are, and how everything is outside our control. But when you decide that your future is largely determined by your own choices, you start to move in a different way, make more progress and feel better about your life.
There’s no substitute for taking action.
Many wait for opportunities to come knocking. Many wait for the perfect time to invest. Or they wait until they’re earning more to start saving. But the time to start is always right now. People on the FIRE path tend to make things happen by being proactive and taking small steps on a regular basis to improve their lives. With each step, momentum builds and this encourages more action.
What’s the point of Financial Independence?
To me, it means building freedom and optionality in your life. It doesn’t mean dropping out of society. And it doesn’t mean never working again.
It means having the choice to work on anything we feel is worth spending our time on, while we’re lucky enough to be on this earth. Doing things that matter. Not for money or prestige. But because it’s genuinely worthwhile for its own sake.
And I don’t mean just traditional work. That can include raising children. Spending time on our health or spirituality. Doing community work. Building a business. Or simply creating better relationships and living a much more balanced life.
Financial Independence is about having the flexibility to work less (or not at all), if more important things come up. Or if we just want to take an extended break and dedicate our energies elsewhere. It doesn’t have to be all or nothing. Work can be scaled up and down as desired.
Re-writing History
There’s an old saying we’re all familiar with that I’ve been thinking about for a while. “Time is money.”
This saying is no doubt true, to a point. We spend time being productive, at work or in our business, and we earn money. But I see it a little differently. Rather than accepting, yes time is money, what if there’s another way to look at this?
Instead of Time = Money… I think: Money = Time.
Why? Because any money we save and grow can create free time at any point in the future, like our example earlier in this post. So, maybe we’ve had it backwards all these years!
My mission is to change people’s relationship with money. So they can see it’s not just for splashing around and creating some short-term highs. It’s way more powerful than that! If used correctly, the need to trade our time for money simply disappears.
So, rather than trading our lives away for money forever, let’s make a plan, and spread the word!
We’ll get our spending under control, so there is always surplus cash. We’ll build a strong and unwavering savings habit and increase it over time, as we get better at optimising our costs. And we’ll get our money working for us, to create a passive income stream that grows over time.
As we build our savings and investments, we’re able to buy ourselves greater amounts of free time. Until we get to the magical place where it’s all free time!
Rather than 20-30 years of freedom in our later years, where we might want to kick back and do a bit of travel or play golf, the FIRE crowd is often looking at 50-70 years of ‘retirement’. And with modern medicine and technology, it could even stretch further!
Final Thoughts
I hope you can see that the FIRE movement, and the philosophy behind it, is much more about life than it is about money.
Money is just the tool, but life is the focus.
With all that free time, we’ll still need to be productive members of society to live our best lives. And we’ll be happy doing so. But we get to do it from a position of financial strength and freedom. Choosing where and what we allocate our time to. And that’s a wonderful way to live!
If you know someone who doesn’t quite ‘get’ what all this FIRE stuff is about, maybe send them this post or discuss the ideas behind it.
Thanks for reading, and I’ll see you on the other side.
