4 Lessons I Learned On My Journey To Financial Independence

By Amy Ouellette

Based on the FIRE movement

I’ll be the first to say that the FIRE concept may not be for everyone – “Financial Independence, Early Retirement” is an intense personal exercise in restraint, minimalism, and often difficult choices.

I literally stumbled into the FIRE movement by accident – I was unfortunate enough to run up a large amount of debt before graduating from college. That moment opened my eyes to personal finance and closed my wallet at the same time. As someone who is on the FIRE journey myself, I’ve learned a lot along the way. I’ve made some mistakes, made some successes, and most importantly, found that I love sharing my experiences with others.

I’ve tried many versions of tight budgeting, loosening wallets while living in one of the most expensive cities in the world, and everything in between. It’s important to note that the FIRE movement is not a one-size-fits-all, so do what feels right for you. As you go through different stages in your life, what feels right can change over time. Be flexible and kind to yourself.

Holistic Lifestyle Considerations: FIRE pairs well with minimalism and reducing consumption. It doesn’t mean you’ll never buy anything or drink another latte again, but it does mean paying attention to how you really enjoy spending time, and the joy you expect from shopping. Also, consider how social media can encourage compare-and-buy tendencies into a lifestyle that’s just window dressing.

Join your neighborhood’s local Buy Nothing Facebook page to request items or browse what others are giving away. There are also groups for swapping or getting help with DIY projects. Think carefully about where you want to intentionally spend on a few higher-priced items, rather than falling into the trap of buying and replacing cheaper items. Choosing where to spend also allows you to be frugal in areas that are less important to you.

Celebrate important moments: A minimalist mindset is a helpful way to avoid spending traps like giving gifts. I’ve never been a fan of forgoing gifts to celebrate holidays or events. People can get just as much joy (or more) from giving and receiving gratitude and love via written cards or notes, sharing experiences, or offering to cook together.

Consider starting conversations with family about not giving physical gifts over the holidays by offering a group activity as another way to spend the time. and for those with additional funds who wish to donate, consider funding college savings plans or other accounts for the next generation in your family.

Plan for Retirement: Make the most of your company-sponsored retirement plans—saving right from your paycheck is the best way to avoid yourself. Use HSAs for longer-term savings (ie, pay for medical needs out-of-pocket today and consider HSAs for tax-deferred growth). Maximize your 401(k)—especially with Employer Match. It really is free money to save for your future.

Research whether pre-tax or Roth contributions are right for you. Did you know that you can top up your Roth conversions in your early FIRE years to fund your pre-59-1/2 expenses? Research these methods, but don’t let the research stop you from saving early and often.

Stay flexible in approach: I’ve tried a number of ways to budget, track expenses, and set what goals I’m aiming for. I find that focusing on a core goal is best to maintain focus, and it helps to make small victories along the way. Find tools and apps to help you on your journey and ditch the ones that distract you – my current favorite is YNAB (You Need A Budget): It helps me hold on to cash for specific reasons (I’m good at it to find other ways to use cash, else!). Realize that what you think is important today may not align with what’s important five years from now, and be willing to change.

Running up a huge mountain of debt before I even started work was one of the hardest things that has happened to me. But it was also one of the best as it launched me on my quest for financial independence. While the FIRE movement may not be for everyone, I believe there are aspects that everyone can adopt and integrate into their daily lives. Achieving financial independence is a goal that can be achievable for most with certain lifestyle changes and a commitment to making a plan and sticking to it.

Amy Ouellette is Vice President at Vestwell.

-Amy Ouellette


(ENDS) Dow Jones Newswires

10/15/22 1258ET

Copyright (c) 2022 Dow Jones & Company, Inc.

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