What You've Been Getting Wrong About FIRE

In the past few years, financial independence and retiring early, aka FIRE, has been a hot topic. Especially amongst people who want to avoid working the 40-hour week until the typical retirement age. I’ve seen a lot of people writing articles and making videos about the FIRE movement, so I thought I’d share my perspective as someone who has been FIRE since 2019.

If you’re reading this there’s a good chance you already know that my husband Amon and I retired in 2019 before the age of 40. We’ve discussed a lot of subjects related to financial independence on our blog and YouTube channel, but we don’t talk much about the FIRE movement itself.

And I want to share some of my thoughts - in particular, the things I think people get wrong about FIRE. So here goes.

How FIRE People Live Off Their Investments

This is something most people misunderstand. If you asked a regular person on the street how much money you would need to ensure you never have to work again, they’d probably say 5,10, 15 million dollars!

Most people don’t think about what it really takes to retire early, particularly in terms of living off your investments, and all the benefits that come with that. But people who truly achieve FIRE understand that they don’t need millions in their bank account, they just need the right investment portfolio to support them in their retirement.

And it’s not just the ‘average’ person - I’ve met financial gurus and advisors who don’t even understand it! Believing you need multi-millions to retire early might be the biggest misconception I’ve observed when people talk about FIRE.

The FIRE Movement Is A Recent Invention

Nope. No way. For as long as investing has existed, there have been people who have been able to live off them for the rest of their lives, even from an early age. The only reason you think FIRE is a new concept is that no one used to call it that. They’d just say “I live off my investments.”

Amon and I see this all the time when people ask us what we do for a living. When we talk about FIRE we’re often met with confusion, but when we say “we live off our investments,” they say “Oh! So you’re investors?”

I suppose that’s accurate. At the end of the day, FIRE is just the same thing under a different name. Think of it as a rebrand for the 21st century.

FIRE People Are Unhappy

Some people assume that everyone who is aggressively pursuing financial independence for the purpose of retiring early lives frugal and deprived lives, and they end up unhappy as a result. This couldn’t be further from the truth, especially because it would make people so unhappy.

FIRE is all about consistency and longevity - reinforcing those good financial habits in the long-term to eventually reap the rewards. Very few people are going to spend 8,10,12, or 20 years making themselves miserable just to achieve FIRE! It has to be sustainable, and being miserable is the opposite of that.

During the 8 years that Amon and I pursued FIRE, we traveled the world, ate out at restaurants, splurged on fun events we wanted to attend. The difference was that we shifted our financial priorities. We wanted to be able to have fun, so we chose to forego other things: no brand new cars and no enormous houses. We spent our money efficiently, letting go of things we didn’t need without depriving ourselves. This is what most FIRE people do.

It Takes Money To Make Money

You really don’t have to have a six-figure income to reach FIRE. Achieving FIRE is based on your personal situation - meaning if you make 50k a year you probably won’t need the same amount of money to reach financial independence as someone who earns 500k.

People forget that reaching FIRE isn’t about making more money, it’s about saving more money. Increasing your savings rate is key to achieving FIRE. Consider the average retiree who saves 5% of their income to retire at 65. If you scale your savings anywhere from 10-50% of your savings you can see how quickly it’s going to reduce your retirement age.

People Who Pursue FIRE Are Too Pushy

There’s this idea that people who are pursuing FIRE or have already achieved it (like us) are so passionate about the concept that they try too hard to push it on others. I couldn’t disagree more with this.

The fact is that you can’t push the idea of FIRE on someone who isn’t ready to embrace it and isn’t already thinking along similar lines. These are people who are already looking closely at their finances and are ready to improve their financial literacy and start investing. There’s no point trying to sell the idea to someone who doesn’t want it. Honestly, FIRE is not for everyone, and it’s not our place to push it on others. In my experience, the majority of FIRE advocates feel the same way.

FIRE Only Works For A Certain Type of Person

Another serious misconception is that people who pursue FIRE are a small, niche group, and the concept only works for a specific kind of person. This couldn’t be further from the truth! So many of the people I’ve talked to about FIRE are unique, from different backgrounds and with completely different cultures, religions, ethnicities, etc. The FIRE movement is growing so rapidly that these people can’t be pigeonholed anymore. Even here in Portugal, we’ve met strangers on the street who have heard of FIRE, and some who are even following our blog and YouTube channel!

The point is, FIRE isn’t limited to a certain type of person. Anyone can become a part of it, so long as they’re willing to learn and adapt.

There are so many misconceptions about FIRE that can scare people away, and it’s such a shame. But part of what I love about this movement is that it opens people up more to talking about finances, financial independence, and even early retirement for those who are ready for it.

It opens up conversations about credit scores, debt freedom, and so many other things that people have become afraid to talk about casually. And at the end of the day, talking about them is going to improve things for everyone. That’s just one of the things I think FIRE can do for society, and I hope by setting the record straight you can think more clearly about it, and decide whether it’s the right choice for you.