F.I.R.E Movement F.I.R.E Movement

F.I.R.E Movement: Meaning, Types, Rules, & Targets

The meaning of F.I.R.E movement is Financial Independence, Retire Early. It is a wealth creation and lifestyle approach that is geared towards achieving early retirement through high savings, simple living, and passive income.

Many proponents of F.I.R.E. believe in its efficiency. But should you? Read this blog to know more, including the steps to achieve F.I.R.E and retire before the conventional age of 60 in India. 

What is the F.I.R.E Movement?

Financial Independence, Retire Early (F.I.R.E.) is a way of life that aims to help its followers escape the 9 to 5 grind much before the widely accepted retirement age of 60. 

A follower of the F.I.R.E movement must allocate a majority of their paycheck to saving and investing while living a frugal lifestyle.

Living below their means will help not just with saving while working but also when the individual has retired early. 

Thus, you could say that F.I.R.E. is also a mindset switch that relies less on materialism and more on sustainability, rooted in the philosophy of intentional living and financial autonomy. 

Who Started the F.I.R.E. Movement?

The origins of the F.I.R.E movement can be traced back to the 1992 book by Joe Dominguez and Vicki Robin “Your Money or Your Life”. 

In their seminal work, the authors emphasize the fact that individuals must focus on living a fulfilling life rather than toiling for long hours across decades to make money. 

The book presents a step-by-step process to achieve financial independence and, more importantly, align financial decisions with personal values. 

Thematically, “Your Money or Your Life” is centered around mindful spending, tracking expenses, and creating an understanding of the true costs of life. 

An increasing number of people are exhibiting interest in leading a more fulfilling life due to varying reasons. As a result, this movement has gained considerable popularity in recent years. 

Core Principles of the F.I.R.E Movement

Followers of the F.I.R.E. strategy aim to minimize their expenses, explore multiple income sources, and create long-term investment portfolios. That’s why these principles are crucial to following the F.I.R.E. movement:

  • Passive Income: You must invest in top sources of passive income. This money can help lead a comfortable retired life. 
  • Extreme Savings: You must aim to save 50% or more of your monthly income. All other expenses must be covered by what’s remaining. 
  • Early Retirement: Rather than the traditional retirement age of 60, your aim must be to retire in your 30s or 40s.
  • Investing Strategies: Make smart investment decisions to create wealth with a special focus on high-quality assets and venues.
  • Avoid Debt: Try to lower or completely pay off your debt as soon as possible. 
  • Side Hustles: Explore side hustles to earn additional income.
  • Mindset: You must aim for a minimalistic lifestyle and train your mindset for that lifestyle. 

Another core principle revolves around living below your means. The question is – why?

Buying what you need (not what you want) has a compounding effect on your savings. 

Next, you’re striking a balance between your current financial situation and post-retirement, meaning you’ll have more money for your future self. 

Types of F.I.R.E.

Here are the different types of F.I.R.E. that you must know more about before selecting one for yourself: 

1. Lean F.I.R.E.

This is the most extreme form of F.I.R.E. Learn F.I.R.E. is an approach that requires you to lead a highly minimalist lifestyle. 

You must ideally have a target of saving 70% or more of your monthly income, which will be invested in top passive income ideas.  

To achieve this goal, people turn to three principles:

  • Geographic Arbitrage: Move into a smaller home that carries lower rent to ensure that your living expenses are at a bare minimum
  • Mindful Eating: Stick to eating homecooked meals with an odd date/treat here and there
  •  Extreme Frugality: Save, save, and save most of your income

2. Fat F.I.R.E.

This approach is the exact opposite of Lean F.I.R.E. In fact, Fat F.I.R.E focuses on leading a comfortable lifestyle while working towards early retirement by creating a sizeable portfolio of investments.  

As a follower of Fat F.I.R.E., you must have a general goal of saving 50% or more of your monthly income. 

To achieve these goals, you shall invest in real estate or other securities that can help generate passive income and turn to principles such as:

  • Diversified Portfolio: Invest in real estate, stocks, bonds, and other passive income investments 
  • High-Quality Living: Lead a comfortable lifestyle by investing in quality experiences, things, and assets for early retirement
  • Real Estate: Aim to generate income through real estate (rent & lease) 

3. Barista F.I.R.E.

This approach is a combination of Lean F.I.R.E. and Fat F.I.R.E. It requires you to take on a low-stress part-time job like a barista or part-time teacher after you retire early. Your aim must be to save 30% or more of your income.

Furthermore, this type of F.I.R.E. may seem contradictory to the overall promise of retiring early because you’ll still be working after financial independence.

But the thing is, you’ll be pursuing passion-driven jobs that pay a decent amount of money. Barista F.I.R.E. principles include the following:

  • Early Retirement: Achieve financial independence early in life to transition into part-time work on your terms
  • Pursue Passion: Choose a part-time job that is in line with your passion or interests
  • Flexibility: Maintain the freedom to explore hobbies, travel, and spend time with family while supplementing income through work

4. Household F.I.R.E.

It is a F.I.R.E. type with a focus on securing financial independence as a family unit. All your family members will work together to save and invest, eventually retiring early together. 

You all must make financial decisions based on the welfare of all members by following early retirement principles such as:

  • Collaborative Effort: Work together as a team to achieve shared financial goals pre and post-retirement
  • Open Communication: Discuss financial decisions, budgets, and investment strategies as a family
  • Mutual Support: Ensure the well-being of all family members by making financial choices that benefit everyone 

5. Coast F.I.R.E.

This is a highly relaxed approach to F.I.R.E. It requires you to save enough money to retire early, but you may continue with your current job till you reach a certain age. 

Under this approach, you must aim to save 20% or more of your income. You can continue working till you are 60 or above, and achieve this type of F.I.R.E. based on principles such as:

  • Flexible Retirement: Choose when to retire based on your preferences and financial milestones
  • Less Pressure: Work and gather experiences that align with personal interests rather than financial necessity
  • Balance: Enjoy the benefits of financial independence while maintaining a balanced lifestyle with continued employment

Benefits of the F.I.R.E. Movement

FrugalitySpend less and save more
FlexibilitySave as per your goals & convenience
BalanceTransition from a job to retirement or keep working once you retire
Early RetirementRetire early to enjoy the finer things in life
Hobbies & PassionEngage in activities you’ve always wanted to do

Criticisms of the F.I.R.E. Movement

FutureLong-term events are much harder to ascertain
ProcessExtreme frugality may not be ideal for everyone
Early RetirementBeing bored of retirement is a thing
Job MarketFinding high-paying jobs is difficult
VolatilityInvesting carries risks, especially during volatile markets

Setting Financial Targets for F.I.R.E

You need to follow these steps to set suitable financial targets within the F.I.R.E. framework: 

1. Calculating Your F.I.R.E. Number

Having a ballpark retirement corpus milestone in mind can help you determine a lot of things, starting with the amount of money you need to save every month. 

This corpus will be your “F.I.R.E. Number” – the goal and the target. You must determine the amount you must save to lead a comfortable life after retirement. 

Of course, the amount you need to save will depend on the type of F.I.R.E. you’re following. In any case, your income, risk profile, and other factors will determine your F.I.R.E. target.

2. Retirement Strategies

It is wise to set age-based milestones because You’re going to want to check your progress for early retirement frequently.

This will help you course-correct in case of internal or external volatility.

Don’t forget to diversify across equities, fixed-income securities, and more high-value investments. You will also have to eventually define a sustainable withdrawal rate.

3. Emergency Funds

Set some money aside for a rainy day. This amount should ideally be 3 to 6 months of your living expenses and some more on top. Always check back on this fund as and when your life moves on. Meanwhile, ensure that you’re insured.

4. Long-Term Planning

Account for inflation in your retirement plan. Create a clear estate plan. Address healthcare and aging costs. Stay informed for ongoing financial management. Adapt strategies to changing life stages.


The F.I.R.E. movement is a robust strategy designed to achieve financial freedom. It requires sacrifices in the short to medium term for a relaxed and fulfilling life in the long term. 

If you want to enjoy the benefits of F.I.R.E., then choose from any suitable F.I.R.E. type and start working toward financial independence diligently. Remember to always understand your risk profile before investing.

If you’re going all in on investing and eventually withdraw your money, you’ll need to be vary of tax implications. Watch the video below to know more about saving taxes.