Everything Wrong with the FIRE Movement
Live in the now and do not aim for a dream in the future
Disclaimer: I do not agree with the FIRE lifestyle. Nevertheless, if you found peace with it, then I congratulate you. This piece reflects only my honest opinion
When I started my saving journey in 2016, I immediately became aware of the FIRE movement (Financial Independence, Retire Early). I found multiple YouTube videos, books, blog posts, and podcasts about the subject. The content regarding FIRE was everywhere, and I wanted to try it for myself.
The FIRE followers, Typically Millennials, aim to retire at the age of 30 or at least be financially independent by then. They live frugally, and they try to maximize their savings.
This movement is the total opposite of the Instagram gurus; I’ll make you rich, look at my watches and cars. In all fairness, FIRE is 100 times better than the Instagram “Fake gurus” lifestyle.
The FIRE movement embraces frugality and saving. But at what cost? In the following sections, I’ll go through everything wrong with the FIRE movement (in my opinion), and why I think it is not a valid lifestyle.
Dream of tomorrow instead of living today
The FIRE movement encourages you to maximize your savings now to retire early. Depending on your savings rate now, you can retire somewhere between 7–15 years from now.
People buy this, and it has some truth in its fine print. However, this means that you will not be able to “upgrade” your lifestyle as you grow older. More on that later.
FIRE people enjoy the pursuit of independence at the moment, but what is next? After they achieve their financial independence, FIRE followers will realize that the journey was more fun than the goal.
However, by paying attention to tomorrow and forgetting today, we miss out on a lot of aspects. FIRE followers are so focused on their retirement date that they forget the “NOW.”
The focus is only on money.
Money is essential, but it is not everything. The FIRE movement puts a lot of focus on money and saving. FIRE movement will tell you: to maximize the savings; you should let go of financially unnecessary things.
In the beginning, it is a nice feeling to see the money increases in your savings account. After a while, it becomes a burden. You will be saying “no” to a lot of things you love, to increase the amount in your savings account.
Saving money is essential, but it is not everything, instead of focusing only on the amount you are saving per month and per year. You should set a spending limit per month and save the rest. Each dollar in your spending, as well as in your saving, shall have a purpose. Saving only for an early retirement date is not healthy.
Instead, start saving for different goals. Save for your retirement, save for a new car, save for your next holiday, and save for other goals. Saving money only for the sole purpose of saving is unfulfilling and is aimless. If there is no definite goal behind it, you will feel fatigued from saving and from the future burden.
It does not allow for lifestyle upgrades.
The FIRE movement will tell you to save 25 times your yearly expenses, to retire early. For example, if you need 30,000 $ a year, then you need to have saved 750,000 $.
The FIRE movement tells you to suffer now to maximize your savings and retire early. The trade-off is, however, that you are stuck in this lifestyle for your entire life.
But the FIRE movement forgets that people tend to upgrade their lifestyle. The FIRE movement doesn’t allow for any lifestyle upgrades. If you saved and invested 750,000 $ to live of 30,000 $ a year, you can not buy a better car or upgrade any aspects of your lifestyle.
FIRE only works if you want to “survive” for the rest of your life. If you are ambitious and always looking to have more in life, then this lifestyle is not for you.
The time horizon is too long.
The RE in FIRE stands for Retire Early. And this is precisely the problem. The movement is based on the 4% rule, which was developed for a traditional retirement time of 30 years and not potentially 70 years.
The 4% rule of thumb determines how much a retiree is allowed to withdraw from his savings each year. This rule offers the retiree a steady cash flow while maintaining an account balance that keeps that cash flowing.
This rule allows a 1–2% adjustment annually to account for inflation, and that is where the problem resides. The 1–2% adjustment for inflation is planned and developed for a retirement time-frame of roughly 30 years. With FIRE, retirement can last for up to 70 years. Therefore, the 4% rule might not be sufficient.
FIRE promoters do not mention their real source of income
When I showed interest in the FIRE movement, I read books about it and watched YouTube videos on the subject. However, the majority of the FIRE promoters on YouTube do not mention their real source of income; they do not count their YouTube revenues as an income.
For me, this is a problem. If you are promoting “your” FIRE lifestyle and asking me to join this cult, then I expect at least to be honest about it and mention that the majority of your income is coming from YouTube.
Living frugally, investing, and saving money are good points that we can take from the FIRE movement. But why should we save now, to live frugally in the future? Isn’t it better to save now and invest now to have a better lifestyle in the future?
I follow the following steps:
- Give every dollar a purpose. I do not save just because I want to save money. I save money because I have a specific goal in mind.
- Be happy. If a particular purchase or vacation makes you happy, then be happy (as long as you can afford it). Do not be miserable now, chasing a dream that might never happen in the future.
- Generate cashflow. Robert Kiyosaki, the author of Rich Dad Poor Dad, mentioned in his book that the rich have money work for them. They work hard to earn money, and they put this money to work for them to generate more money.
- Live now. Enjoy your life now. You never know what the future has for you. None of us expected 2020 to be this way, but here we are. Do not over stress, over money; money is not the goal; money is a means to a goal.
If you liked this medium post, try reading my other posts about finance:
