Don’t feel left out of the FIRE movement

The acronym and the investors

If you’ve ever considered early retirement, you could join the FIRE movement. FIRE stands for “financial independence retire early.”

During their working years, FIRE investors invest as much of their income as possible in hopes of attaining financial independence at a young age and maintaining it for the long term—a.k.a. retirement. Their goal is to live off their investments so they’re free to enjoy an independent lifestyle without needing income from a traditional job.

Not all FIRE investors have the same approach to financial independence. They don’t necessarily work 70 hours a week, live in a tiny house, and eat ramen noodles every meal. The FIRE movement has a diverse following, and each investor has their own “rules” for pursuing financial independence and security.

How to think like a FIRE investor

The level of commitment to living frugally and investing aggressively varies by investor, but most FIRE investors adhere to the following best practices.

Plan ahead

Make a specific retirement goal. Start by asking yourself a few questions:

  • What’s my income?
  • What’s my current retirement balance?
  • What’s my savings rate (the percentage of income I’m saving)?
  • What’s my spending rate (the percentage of income I’m spending)?
  • How do I envision my postretirement lifestyle? Do I think my spending rate in retirement will be higher, lower, or the same as it is today?
  • How soon do I want to retire?

Our advice services can help you create and maintain a comprehensive financial plan that’s tailored to your specific goals, or you can check out our investment calculators and tools to come up with your own investment strategy.

Avoid debt

Avoiding debt is good advice for anyone, but it’s especially crucial to investors who’d like to live off their investments long-term. Bottom line: If you have debt, make a plan to pay it off. And don’t take on any new debt, especially high-interest debt like credit cards.

For example, let’s say you have a $5,000 credit card balance with an interest rate of 15%. If you pay $100 a month, it will take you about 6.5 years to pay it off, and you’ll have paid almost $3,000 in interest—money that you could’ve been investing.

Reduce your spending

Here are some ideas for how to spend less, but the possibilities are endless:

  • Drive a fuel-efficient car, and keep it until it dies.
  • Go to restaurants and bars sparingly. Try entertaining at home, potluck style.
  • Avoid spending money on activities and entertainment. Instead, consider hiking, visiting parks and libraries, and attending free community concerts.
  • Shop infrequently—but when you do, buy generic and preowned items.
  • Do occasional “no-spend challenges”—when you don’t spend any money (or only spend money on true essentials) for a set period of time.

You’ll be more successful spending less if you can get into the right frame of mind. Here are some ways to challenge that impulse to buy:

  • Wait a set period of time before purchasing anything over a certain dollar amount. This will give you time to carefully consider how the purchase will impact your life and eliminate the temptation of instant gratification.
  • Think about cost in terms of your time. Let’s say you make $100 in tips after waiting tables from 5 to 10 p.m. on a Saturday night. Is a $20 shirt worth 1 hour of hard work on a Saturday night?
  • Mean what you say (and say what you mean) using fact statements. Saying “I don’t overspend on eating out because saving for the future is important to me” is more empowering than saying “I can’t eat out because I want to start saving more.”

Earn as much as possible

Take advantage of any opportunity to increase your income. That could mean taking a higher-paying job with less convenient hours or filling your spare time with a part-time job or freelance work.

Invest as much as possible

We’re here to help

Our advice services can help you invest for the retirement you want.

Once you establish your spending rate, try to push it even lower: If you can live on 80% of your income, maybe you can live on 75%. (Keep in mind, some FIRE investors live on as little as 30% of their income!)

Let’s say you make $75,000 a year, invest 20% of your income from each paycheck for 15 years, and earn a 6% average annual return. After 15 years, your nest egg would be about $359,963. If you invested an additional 5% (or 25% of your income), your nest egg would be about $449,798—that’s almost a $90,000 difference!*

*This example is hypothetical and does not represent the returns from any particular investment and the rate is not guaranteed.

Invest appropriately

Your asset mix affects your investment returns more than any other factor within your control. Choose an asset allocation that complements your goals, time horizon, and risk tolerance.

Do it your way

The best part of the FIRE movement is that it’s not all or nothing. You can tailor your spending and saving behaviors to align with your goals. But even if you choose to follow just a few FIRE best practices, you can help improve your financial outlook over the long term.


All investing is subject to risk, including the possible loss of the money you invest.

There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.

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