4 Misconceptions Of Financial Independence Retire Early Movement

FIRE stands for Financial Independence, Retire Early. Though the FIRE Movement has been gaining popularity over the years, there are still some misconceptions that is stopping some people from joining the movement. 

Misconception 1: You want to retire early to do nothing and laze around.

That’s absolutely incorrect!

The heart of the FIRE movement is to be able to gain more freedom and autonomy to pursue what we like to do. This gives us more time to do the things that we find meaningful and fulfilling without having to worry about the financial aspects.

The intention is not that we do not wish to work and just want to laze around like going to the coffee shop to ‘la kopi’, sleep through the entire day at home or watch Netflix the entire day. 

In fact, some FIRE practitioners would still choose to work even after they manage to retire early. Some continue on their existing job while others seek a job that they are passionate about, which they may not have the chance to try out if not for FIRE.

Personally, here are some aspects which I would like to try out when I FIRE. I would like to continue with content creation in the investing space and even try out interesting jobs like perhaps working at a florist, baking in a cafe or working overseas as a park employee in the happiest place on Earth! There are just so many experiences on my list which I would like to try out.

There is a misunderstanding of the definition of ‘retire early’. Retiring early for many FIRE practitioners means to make time to do things that they find meaningful, not to do it just because one needs to earn that salary for livelihood.

Misconception 2: You need to make huge sacrifices and practice extreme frugality.

Well, that doesn’t have to be the way! 

Though there are some FIRE practitioners who may indeed exercise extreme frugality, we are believers of striking a balance on spending and saving wisely. At times, we may indulge in perhaps a more fanciful meal or to reward ourselves with purchases along the way to celebrate small successes in life. These are somewhat important to motivate us to continue to work harder towards our goals.

The important message is to find that right balance for yourself and do not think that you need to sacrifice your living standards and live overly frugally just so that you can save more! There isn’t a one-size fits all kind of FIRE movement because each individual is unique.

In fact, people who adopt the FIRE movement tend to be more critical of their expenses which is one of the pillars to good financial planning. Use that right mindset to your advantage and FIRE in a manner that is appropriate for the kind of lifestyle you want to pursue.

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Misconception 3: You don’t know how to live in the moment and have fun.

Joining the FIRE movement does not mean that you can’t have fun!

Having fun and attaining happiness in life can come in countless ways — many of which don’t cost a lot of money.

Take for example, instead of dining out at a fanciful restaurant, one can choose to organise a sunset picnic at Marina Barrage.

Or if you prefer something more active, then cycle along the Changi Bay Point to enjoy the picturesque views and shoot some TikTok-worthy content.

For those who like to rack your brains, you can invite your friends over for a board games session!

Nothing beats genuine accompaniment and experience. It’s possible to have fun affordably with your family and friends!

Misconception 4: You need a high income to FIRE.

This couldn’t be more wrong!

While having a higher income may put you on a better starting point, it doesn’t guarantee that you would be able to achieve financial independence faster. 

In a 2022 survey done by Willis Towers Watson, a consulting firm, 36% of the U.S. employees with salaries of $100,000 or more are living paycheck to paycheck. This percentage has doubled since 2019. This phenomenon is called lifestyle inflation where the discretionary consumption increases as you earn a higher salary. Hence, while you may be earning a higher salary, lifestyle inflation can slow down your progress to FIRE.

Conversely, even if one is earning lower salary, as long as he is able to spend prudently, save wisely and invest consistently, it is still possible to achieve financial independence and retire early.  After all, FIRE is simply a math game where you work through the numbers for salary, savings and investment income to attain your FIRE goals. 

It’s time that you try it out on your own and find that right variation of FIRE which suits your lifestyle preference. The next time when you have peers who are still skeptical about the FIRE movement, share the article with them to clear their misconceptions about FIRE!

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