FIRE, or financially independent & retire early, is hot. A movement that has been known for years in The States has been popular in The Netherlands since 2020. The idea is to live frugally(er), make the gap between income and expenses as large as possible, and invest that gap. Every month. Invest as much as you can. Because if you invest your money then your wealth increases, compound interest is called that. And then if your wealth is so large, you can start living off your returns. And thus retire – “retire early.
At Elfin, we find the idea behind the movement interesting: putting your money wisely to enjoy something you’ll never get more of, namely time.
Financial independence is great because we know there is nothing in our lives as scarce as time.
Time is scarce
Think of time as a bank account, from which you withdraw a little every day, but which is never added to. So one day it will run out – or: go to heaven. Using your money to enjoy this scarce commodity is what drives many women.
And as wonderful as FIRE’s aspirations are, is this something that is achievable for everyone? We have often asked ourselves this critical question. And while we would love to shout a resounding YES, because we grant all women independence, it is a little more nuanced. Perhaps it would be a good idea to review the meaning of FIRE? And give financial independence another angle?
FIRE movement = like a diet
In short, becoming FIRE amounts to spending less than comes in, thus widening the gap between income and spending, and investing heavily. Because with investing you build wealth, AND investing is the trick to eventually living off your returns.
In the FIRE movement, there are those who aspire to be able to retire at 40. This is a fine aspiration, but also very ambitious. Compare the fire movement to the health movement: for some people a vegan diet works, others really need eggs and a piece of meat, others swear by crossfit and some people get fit from running. So many people, so many bodies, so many methods. Likewise for FIRE.
Should you aim to retire at 40? No, of course not. Perhaps your ultimate financial independence move is in being able to work less. To start your own business. Or to take a six-month sabbatical every 5 years. To be able to travel the world with your children.
Within the FIRE movement there are now branches, such as lean FIRE(focus on enough power for a minimalist lifestyle), barista FIRE(the focus on enough power to only have to work part-time) and HOT(Happy, Opportunity rich, Time rich).
For us, independence has a lot to do with a feeling: financial peace brings peace in other areas. Having your affairs in order financially allows you to make choices with your heart. That doesn’t mean you necessarily have to have tons of power.
What can you do?
Even if you have chosen a profession in healthcare or education, even if you would like to work part-time, even if you have a rental home, even if you have a family, or are a single mother. We want to encourage you and where possible give you tools to strengthen your own financial position. Because maybe financial independence is not necessarily being able to live off your assets, but maybe your FIRE starts with having good financial oversight. Or your first €20 investment. Or take a good look at your pension statement. Maybe you’ll go for lean or barista FIRE.
Making your own financial decisions that help you build a healthy financial future: maybe that’s a wonderful first FIRE wish!
