Since the explosion of the Financial Independence, Retire Early (FIRE) movement, there has been a steady increase in articles and posts (like this one) suggesting that pursuing FIRE will ultimately lead to unhappiness. For those who have recently discovered the FIRE way of life, this can be disconcerting and prevent FIRE hopefuls from ever getting started.
When done correctly and in line with your principles, pursuing Financial Independence, Retire Early (FIRE) can be extremely rewarding. When FIRE is pursued via extreme frugality and deprivation of pleasure it naturally leads to unhappiness. When retirement is the goal, employment can feel like a long term chore.
Psychologically speaking, FIRE isn’t for everybody. To become financially independent at a young age, you need to have a base layer of interest in the underlying maths, genuinely want to be free from the requirement of employment and have the discipline to make the necessary decisions over the long term.
Will pursuing financial independence, retire early (FIRE) make you less happy?
Some people become less happy after they start pursuing FIRE as the extreme frugality and deprivation they impose on themselves makes them understandably miserable. To successfully FIRE, some sacrifice is required and the delaying of gratification often leads to better long-term rewards.
To become financially independent or to retire early, you need to invest a sizeable pot of money and draw on the passive returns of that money over time. To get to such a position, you would need to develop a large surplus between your income and expenses in order to invest that money over time.
To create such a surplus, you can either increase your income or cut your expenses. Increasing your income is effective but often easier said than done. Cutting your expenses, however, is something anybody can do with a bit of thought and planning.
Those who find themselves unhappy after beginning to pursue FIRE typically do so for one of two reasons.
Firstly, they over-commit to cutting their expenses and deprive themselves of the chance to spend money on the things they love. When you cut things you enjoy from your life with a lofty, long-term goal in mind, it can create resentment towards that goal.
The second trap of the FIRE movement is focussing too much on the ‘retire early’ part. If your entire financial plan and life are built around the idea of retiring early, it’s very unlikely you will be able to take any satisfaction from your job. For this reason, many people who seriously follow the FIRE movement end up hating their jobs and when you hate something that takes up 40+ hours a week of your life, it’s very difficult to be happy in general.
Of course, this works both ways, many people discover FIRE and become interested in it because they don’t like their jobs (or lives) in the first place.
It’s important to remember that financial independence doesn’t necessarily mean you will never work again. In reality, sitting on a beach, sipping mojitos isn’t a genuine life plan, it is not something you can actually do for more than a couple of weeks.
The irony of FIRE is those with the mentalities capable of achieving it are typically the type of people who could think of nothing worse than never working (in some guise) again.
Becoming financially independent is a great goal to have. It is an amazing feeling to not be dependent on an employer or job to pay your bills.
Does pursuing Financial Independence, Retire Early (FIRE) make you hate your job?
Whilst pursuing Financial Independence, Retire Early (FIRE) doesn’t necessarily make you hate your job, it does make it internally clear that your day job is a means to an end rather than a true calling. Over time, this realisation can make people take less enjoyment from their employment.
You’ve probably heard the corny, but accurate, saying “enjoy the journey, not just the destination” and this quote certainly rings true when it comes to following the FIRE lifestyle. When your 9-5 job is simply a tool to be leveraged until the point where you are financially independent rolls around, it’s easy for it to lose genuine meaning.
People who enjoy their work typically do so either because they are one of the lucky ones who are truly excited by their work or because they work for a great employer, doing a job that is generally interesting, with a high degree of autonomy and respect.
As mentioned above, a common motivation for the FIRE lifestyle is to escape the 9-5 drudgery and have freedom of time and location. Once the decision to pursue FIRE has been made, all delusions of liking your job can go out the window and cause you to become resentful of it.
However, this doesn’t have to be the case. My preferred way of looking at is this – sure, my full-time employment is a tool to be used to earn income to ultimately become financially independent but why not enjoy the responsibility, the intellectual growth and the interactions with the people along the way?
Do you have to be highly frugal to become financially independent?
You do not have to be extremely frugal to become financially independent, this is a myth. Becoming financially independent relies on creating a surplus between your income and expenses. This can be done even with moderately high expenses and high quality of life depending on your income level.
When it comes to frugality, an appropriate balance must be struck. Too frugal and you will live a life of deprivation, frustrating your friends and family along the way. Not frugal enough and you fall into the dangerous trap of consumerism, where you convince yourself that happiness is linked to how much you spend.
Due to the concept of hedonic adaption, humans adapt to their surroundings and quality of life very quickly. This is why most lottery winners report being no happier five years after winning than they did before. Similarly, consumerism is a hamster wheel of cheap dopamine spikes, very rarely leading to meaningful happiness.
If you have a low income and are unable to meaningfully increase it, it’s true that you will have to cut your expenses (sometimes dramatically) in order to create a surplus big enough to invest a meaningful amount each month. The key is to prioritise your budget on the essentials and the things that truly matter.
Is Financial Independence, Retire Early (FIRE) a realistic goal?
Financial independence, retire early (FIRE) is a realistic goal. There are thousands of early retirees across the internet who are living proof of this. You will become financially independent by saving and investing 25* your annual expenses which is possible if you achieve a high enough savings rate.
Some commentators bash the FIRE movement for being unrealistic or even classist i.e. an unattainable goal for the working class.
Obviously, becoming financially independent is going to be easier for those earning a high income as they have are more capable of achieving a meaningful surplus (difference between income and expenses).
That being said, the internet, forums and Reddit are littered with stories of people from working-class or outright poor backgrounds becoming financially independent by following the guidance of the FIRE movement.
Retiring early or becoming completely financially independent to the point where your passive income covers your financial expenses is not an easy thing to achieve. That’s why such a small proportion of the population retire in their 30s, 40s or even 50s. Despite this, it is possible and a realistic goal for many.
Will I become bored if I ‘FIRE’ (retire early)?
Boredom is a common issue for those who retire early with the data suggesting that men especially struggle in the period post-retirement as they lack a purpose or focus. The key to preventing this boredom is to enter early retirement with a thorough plan of how you plan to spend all of your free time.
Retirement is often made out to be the panacea of a career and the time where you can finally hang up the work shirts for the final time and relax. In reality, many people, and especially men, struggle with retirement as they lose their sense of purpose.
Interestingly, the typical retirement age coincides with the biological period in men’s lives where their level of testosterone begins to decrease. These two factors together have led to a substantial data set on the difficulties men face in this period of their life.
When it comes to early retirement, the issue around losing your purpose remains. Somebody who retires without a plan will almost certainly become bored and lack a guiding purpose or activity in their lives which can be psychologically difficult.
For this reason, planning how you will spend your time post-retirement carefully is essential. Now more than ever you want to set goals of things you want to achieve that may have been less possible when 40+ hours of your week was consumed by employment.
How popular is the FIRE (Financial Independence, Retire Early) movement?
The FIRE (financial independence, retire early) movement is increasing in popularity at a rapid pace. Whilst almost impossible to accurately measure those who are following this lifestyle, popular FIRE forums and Reddit pages have amassed millions of subscribers and continue to grow at an accelerating rate.
Please check out the below-listed resources related to FIRE that I have found helpful:
- The Mr Money Mustache blog – this is the resource that really got me interested in financial independence. The creator emphasises the power of frugality and simple index-fund investing and explains how this helped him retire before he reached 30.
- Reddit – Financial Independence page – a great resource for seeing inspiring stories or getting your FIRE related questions answered by people on a similar journey.
- Reddit – UK specific FIRE page – similar to the above but UK specific so advise on UK specific tactics (ISAs, SIPPs for investing etc).
How to convince your partner to FIRE (Financial Independence, Retire Early)
One difficult stumbling block many face when beginning their financial independence, retire early (FIRE) journey is getting their partner on board. The key here is to communicate clearly why this is something you want to follow, what the benefits are, what the sacrifices will be and ultimately, be willing to compromise.
Some partners may be reluctant to pursue FIRE with you, especially if strict frugality is likely to be involved. Try highlighting the benefits to your partner as the first port of call – reduce future financial worries, be more available to spend time with children and family, be healthier and less stressed etc.
Demonstrate to your partner that anything worth having in life requires some short-term sacrifice. As a general rule, any pleasure that is easily accessible and free is not worth having and any pleasure that is hard to achieve and difficult to attain is the real deal.
Best books to read in order to achieve FIRE (Financial Independence, Retire Early)
The best starting books to read in order to become financially independent are JL Collins – Simple Path to Wealth, Ramit Sethi – I Will Teach You to Be Rich and David Sawyer – Reset. These three books will give a broad education in personal finance and set you on the right path to financial independence.
Amazon links to each below:
As always, please remember I am an Accountant, but not your Accountant. In this post (and all of my others) I share information and oftentimes give anecdotes about what has worked well for me. However, I do not know your personal financial situation and so do not offer individual financial advice. If you are unsure of a particular financial subject, please hire a qualified financial advisor to guide you.
This article has been written by Luke Girling, ACA – a qualified Accountant and personal finance enthusiast in the UK. Please visit my ‘About‘ page for more information. To verify my ACA credentials – please search for my name at the ICAEW member finder. Please comment below or contact me here to get in touch with questions or ideas for future posts.