Financial Independence, Retire Early


Millennials, we’re often told, are feckless and dangerously obsessed with avocados. Older people tend to imagine that if millennials could only tear themselves away from munching on endless rounds of avocado toast, they could probably save up for a house.

But a growing band of millennials are embracing a rather more radical attitude to money.

A growing online community of financial independence-obsessed youngsters are shunning spending, and putting away up to half their earnings each month. They use apps and the power of the ‘sharing economy’ in an effort to retire early.

The community is known as FIRE — ‘financial independence, retire early’.

Fans use apps to track their spending, right down to the last penny, use public transport instead of owning their own vehicles, and try to put off big-ticket purchases such as clothes and shoes as long as possible. Everything possible is saved and invested.

Blogger Gwen of Fiery Millennials says, ‘Becoming financially aware at a younger age… we’re the financial equivalent of a clean slate.

‘We also have tons of time for compound interest to work its magic and make us lots of free money, as well as the time to ride out a bear market.’

The basic idea is that the old certainties (that people work 40 years for the same company, and retire at 65 with a pension) don’t really apply to young people.

So members of the FIRE community hope to write their own rules for how to save, and how to achieve financial independence decades before their parents did.

A popular Reddit group and a group of blogs help FIRE fans keep in touch, with fans offering saving tips and tips on how to spend less. The ‘sharing economy’ also plays its part.

Followers of FIRE tend to rent out shared rooms on AirBnB, and even rent out other assets such as cars in an effort to maximise income from their assets. There’s a strong DIY spirit to the movement, with FIRE fans shunning services such as window cleaners, dog walkers and food delivery services, all in an effort to save money.

The idea isn’t, of course, to retire and then spend the rest of one’s life sitting on the sofa watching reality TV.

Many FIRE aficionados hope instead to achieve financial independence, and then have the freedom to pursue passion projects. The ability to live on much less money is also seen as a goal in itself.

One of the core ideas is that pricey goods should be seen in terms of ‘hours of life energy’ — so, for instance, a pair of designer jeans might be half a day’s ‘time’.

An extension for the browser Chrome converts prices into hours of time, so that people can see exactly what they’re spending before they make a purchase (and work out whether it’s really worth it).

The people embracing FIRE might be young, but the ideas behind it are surprisingly old.

Fans of FIRE are often obsessed with 1992 the book Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin.

The book has become such as cult online that the 72-year-old Robin aims to republish a new version aimed specifically at millennials.

With 365,000 people members of the FIRE community on Reddit, it may be time for the rest of us to retire our ideas that millennials as avocado-munching spendthrifts…

Focus’ head of managed solutions Steve Andrews weighed in: “Against the noise about impulse-spending millennials who are doomed to live hand-to-mouth in the face of increasing living costs, it’s heartening to hear about groups that are overturning the stereotype. It might surprise many more millennials to learn that FIRE isn’t such a crazy idea after all, in fact technology is driving changing behaviour, whether new startup apps to help educate and motivate savers or more advance tools like Cash Flow modelling (especially Focus’ Now:Plan, which uses Moody’s analytics calculations to model the future using the industry leader in market predictions) can paint a picture of how to achieve financial independence, expertly tailored to the individual, whoever they are — and whatever age.”