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FIRE Movement: Achieving Financial Independence & Retiring Early

Last updated on March 6th, 2024 at 11:47 am

Financial independence retire early, or FIRE for short, is a financial and lifestyle movement known as the “FIRE Movement” that has gained momentum in recent years. It is a concept that revolves around achieving a level of financial freedom and the ability to retire early to enjoy life on your terms. In this article, we will delve into the world of financial independence and early retirement, providing you with a comprehensive understanding of this exciting journey including what comprises the 8 Levels of Financial Independence.

Julie Choo-Leconte

Personal Reflection:

I set out to achieve many of the levels of financial independence from the age of 19, moving through from gaining SECURITY to a very long YOLO/FOMO stage also known today as Barista FIRE, before gaining INDEPENDENCE at 38 and now moving towards full FINANCIAL FREEDOM. In sharing parts of my personal money journey, I hope that this article will help to inspire you into the same, with clarity and direction. Your financial future and the ability to live life on your own terms isn’t something that you want to leave to chance so some planning is essential.

What is Financial Independence retire early (FIRE)?

Financial independence (FI) is the foundation of the FIRE movement. It is the state in which an individual or household has enough income and assets to cover their living expenses without relying on employment income. Achieving FI means that you have reached a point where you can choose how you spend your time and resources. The key principles of financial independence include budgeting, saving, investing, and reducing debt.

(RE), as the name states, means to retire early after achieving financial independence. Early retirement is the dream of many individuals. It means you can leave the workforce and pursue your passions, hobbies, and interests while you are still relatively young. Retiring early allows you to enjoy life without the constraints of a traditional 9-to-5 job.

How Does Fire Work?

The FIRE (Financial Independence Retire Early) movement is built on a fundamental principle: accumulating as much money as possible to achieve early retirement and financial independence and even financial freedom. It revolves around the concept of carefully strategizing your finances to secure a comfortable retirement income long before the traditional retirement age which is being moved back further from what was 55 to past 65 year olds in many countries around the world. The core of the FIRE strategy lies in achieving financial independence, which means that you have enough savings and investments to cover your living expenses without relying on a job for income at an earlier age such as in their 30s and 40s.

To make the FIRE strategy work, individuals typically focus on several key aspects. They prioritize aggressive saving, directing a significant portion of their income into savings and investment accounts. Some frugality and minimalism are also central to the FIRE approach, as adherents aim to minimize unnecessary expenses and prioritize their long-term financial goals. Additionally, many in the FIRE movement consider geographic arbitrage, where they may move to regions with a lower cost of living to make their money go further. By carefully managing their finances, investing wisely, and making intentional choices, followers of the FIRE movement work toward accumulating the wealth and financial security needed to retire early and enjoy life on their own terms.

Happy reitirng old person retired and enjoyingl ife in a holiday

What is the FIRE Movement?

The FIRE movement is a community of like-minded individuals who aim to achieve financial independence and retire early. It emphasizes frugality, saving aggressively, and making intentional choices to optimize one’s financial situation.

Key Principles of the FIRE Movement

  1. Frugality and Minimalism: FIRE enthusiasts focus on living a simple and minimalist lifestyle to save money.
  2. Maximizing Savings Rate: Saving a significant portion of your income is vital to accelerate your journey to FI and early retirement.
  3. Geographic Arbitrage: Some individuals leverage geographical arbitrage, moving to lower-cost regions to make their money go further.
  4. Achieving Financial Freedom: FIRE is all about gaining control over your finances and your life.

Common Types of FIRE

In the realm of the FIRE (Financial Independence Retire Early) movement, there are several distinct types of “fires” that represent varying levels of financial independence and retirement goals. These types are:


Lean FIRE is a type of FIRE strategy where individuals aim to achieve financial independence with the bare minimum in terms of expenses and assets. They seek to cover only essential living costs, often by living very frugally. Achieving Lean FIRE means having just enough to retire early and maintain a basic lifestyle without any luxuries.


On the opposite end of the spectrum, Fat FIRE represents a more affluent approach to early retirement. Those pursuing Fat FIRE aim to accumulate substantial wealth and assets, allowing them to retire with a higher standard of living and enjoy a more comfortable lifestyle without financial constraints.

Retirement Plan with illustrations of a clock, envelope, paintings. A FIRE life!

Barista FIRE

Barista FIRE is a hybrid approach where individuals may partially retire or work part-time while pursuing their early retirement goals. It’s often seen as a compromise between fully retiring and continuing to work a traditional 9-to-5 job. People practicing Barista FIRE may take on less demanding or more enjoyable part-time work, such as being a barista, to cover some expenses while still having the freedom to enjoy their lives and pursue their passions.

These different types of FIRE illustrate the flexibility and adaptability of the movement, allowing individuals to choose the approach that best aligns with their financial goals and lifestyle preferences.

Julie Choo-Leconte

Personal Reflection:

Having achieved a level of FIRE that allows me to be comfortable with my finances, naturally, I have considered relocating to a location with a lower cost of living. I am currently exploring southern SPAIN and FRANCE in locations along the mediterranean coast with sunny weather compared to London which was my home while I was focused on making money for over 15+ years.

It’s important to point out that geographic arbitrage works both ways, as it did for me. In my 20s I immigrated from Australia to the UK and London, for the adventure of course, but also because income and especially because of currency exchanges at the time, I was going to earn much more for doing the same job. At the time, the POUND GBP was 3 times that of the Australian Dollar, so making GBP £58,000 was like making AUD $174,000. At the time, the cost of living comparison between the UK and Sydney Australia, was also in my favor according to the McDonald’s Index, where the cost of a cheeseburger was £2 or $6.

8 levels of Financial Freedom by MONEYANDCAKE.COM - Roadmap to Financial Independence Retire Early

8 Levels of Financial Freedom and How it gets you to Lean, FAT and Barista Fire

Let’s have a look at how the process works for Lean, fat and Barista fire respectively while referring to the 8 levels to achieving financial freedom method which I have carefully devised to explain a typical roadmap and journey. 

As outlined above in my Financial Freedom Roadmap, each FIRE level or stage essentially starts within a linear process working towards achieving a specific financial independence goal. I’ve even shared a simple formula so you can see the different FIRE formulas or FIRE calculations to help you determine what you need to do. The journey begins from financial solvency where we first earn our income creating our initial monthly earnings. The process is as follows:

  1. Financial Solvency – The first time we start earning a proper monthly income and becoming independent from our family.
    •  Income >= Debt Repayments + Living Expenses (Monthly)
  2. Financial Stability – When you first successfully built an emergency fund
    • Living Expenses (Monthly) = Income + Emergency Funds (6 months of living expense)
  3. Debt Freedom – This step is achieved when you no longer have debt or bad debt and you can start investing your surplus income.
    • Bad debt = 0
    • Investments > 0
  4. Financial YOLO-FOMO – At this stage, you’ve invested some money and have saved up, you now have some freedom to take a sabbatical from your job and spend to grant yourself more experience and things you bring you joy. Julie’s moneysmarts way is not just about saving for Financial independence but to also grow your health, money, knowledge and more.
    • Investable Cash → Things/Experiences with ROI
  5. Financial Security – When our invested income can cover our survival needs and provide a constant cash flow paying for basic needs. Needs are not wants and does not include holidays, multiple coffees a day at a cafe, eating out or a cable/pay TV subscription.
    • Investment Cash = Survival Expenses
  6. Financial Independence – At this level, you’ve achieved investments that can generate a LEAN annual cash flow or income to pay for your living costs or expenses giving you the lifestyle you wish to retire on. You no longer need to work for money. With Lean FIRE you still need to budget or work part-time in order to sustain your income.
    • Investment Cash = Living Costs
    • Lean FIRE No. = 12.5x Living Costs assuming 4% RULE
  7. Financial Freedom – Reaching this level means you’ve achieved a greater FIRE level using the 4% RULE to pay for both your annual living expenses + small luxuries that make for a nice lifestyle. E.g, holidays, nice restaurants, premium coffee, designer gear, gadgets.
    • Investment Cash = Living Costs + Luxuries
    • FIRE No. = 25x Living Cost assuming 4% RULE
  8. Financial Abundance – The 8th level is final level where you’ve earned so much money you’re truly rich and not just wealthy. You can do most of what you want and also hire people to do all your chores, cleaning, have multiple properties and more. At this stage, you’re living the FAT FIRE life.
    • Investment Cash = anything you want
    • FAT FIRE No. = 50x Living Costs

Applications of 8 Levels of Financial Freedom on Lean, Fat & Barista FIRE

Julie Choo-Leconte

Personal Reflection:

Along my money journey, I have navigated my way through different stages including a long stay in Barista FIRE for 2 years in late 20s and 6 years in my 30s to Lean FIRE at 38. Now in my 40s, I’m trying to decide if I need to move to the next stage from FIRE and towards FAT FIRE.

  • Lean FIRE:
    • Financial Solvency: Achieving financial solvency is the initial step towards Lean FIRE. By becoming financially independent and no longer relying on external support, individuals can begin their journey towards frugal living. For most people, this is achieved when you first move out of home and you have enough income from my first job to pay your rent and living expenses without help from your parents. I achieved this at 23.
    • Financial Stability: Building an emergency fund is crucial for Lean FIRE practitioners. Having savings equivalent to at least six months of living expenses provides a safety net during early retirement. During the first 6 months of working in my first job, I set myself a financial goal to save my emergency fund, giving myself a AUD $10,000 buffer. My the time I was 27, I increased my buffer to $40,000, and at 38 when I retired, I set this to $50,000 in cash inside a CASH ISA Account in the UK, while moving my money into other investments such as stocks, bonds, and real estate.
    • Debt Freedom: Eliminating bad debt is essential for Lean FIRE. By freeing themselves from high-interest loans, individuals can redirect their income towards savings and investments, accelerating their path to early retirement. Just before the interest rate hikes from mid 2022, my husband and I cleared all of our debt, buy liquidating some of our investments. Moving our money into better performing assets, while clearing debt is an important strategy for staying on top of your finances.
    • Financial YOLO-FOMO: Practicing frugality aligns with the principles of Lean FIRE. Rather than succumbing to lifestyle inflation, individuals prioritize investments in experiences that contribute to personal growth and financial stability. I’ve become a digital nomad and spend time travelling to Australia and Singapore more to see my family and friends, and I’m considering moving to SPAIN or France so in 2024, I’m spending some months in different cities and towns across SPAIN and France to see what it’s like to live there.
    • Financial Security: Lean FIRE focuses on covering basic survival needs. By achieving financial security, individuals ensure they have the resources to sustain their minimalist lifestyle during retirement. Financial Planners and tools can help with budgeting and planning. I actually plan and budget carefully to make sure my income sources from investments cover my living expenses for my lifestyle… and where needed, I take on extra freelance work to help me funds extras as needed, such as travelling business class or staying at a 5 star hotel.
  • Fat FIRE:
    • Financial Solvency: Financial independence is the foundation of Fat FIRE. By achieving solvency, individuals gain the autonomy to pursue higher-paying careers or lucrative investment opportunities that facilitate wealth accumulation. I started investing my own money to start new businesses and becoming an entrepreneur, after retiring from my 9-to-5 job in Investment Banking. In the business world, they refer to this as having your ‘Skin in the Game’. Those at the FAT FIRE level, invest their spare funds inside Private Equity or Hedge funds to make their money work harder for them, perhaps dabbling first as Angel Investors.
    • Financial Stability: Building a substantial emergency fund is crucial for Fat FIRE. With a larger safety net, individuals can weather economic downturns or unexpected expenses without compromising their retirement goals.
      What makes up this substantial emergency fund is different for everyone, even if they are rich. For me this would be USD$1million in spare cash which I hope to achieve someday, but others may have a different figure that makes them comfortable.
    • Debt Freedom: Eliminating bad debt is equally important for Fat FIRE. By reducing financial obligations, individuals can allocate more resources towards building their investment portfolio and achieving early retirement. With freedom from bad debt, many wealthier people begin to leverage good debt by using other people’s money (OPM) to help them grow their money, so they may borrow money to help them finance their business and investments. This is what learned Wealth Managers and Asset Managers do, and learned while I worked in the banking industry, and hence I began to explore how to grow my own wealth with their professional money management techniques.
    • Financial YOLO-FOMO: While pursuing Fat FIRE, individuals may indulge in certain luxuries without jeopardizing their long-term financial goals. However, maintaining discipline and avoiding excessive spending is key to sustaining wealth accumulation. When you have income that is surplus to what you need to cover living expense, this can be put towards luxuries. Those living in the FAT FIRE level, typically have substantial passive income from their investments to fund their surplus lifestyles… from designer handbags to business and first class travel. As I have just started my journey, so I am by no means there yet, I often take a freelance or fractional consulting gig to help me upgrade my travel plans.
    • Financial Security: Fat FIRE aims for a higher standard of living during retirement. Financial security at this level means individuals can maintain their desired surplus lifestyle without worrying about financial constraints. People at FAT FIRE level, have the security to buy a yacht and even compete with each other on the size of their yachts, as well as paying other people to take care of their money for them. eg. Today, billionaires like Jeff Bezos, Richard Branson and Elon Musk competing to build space ships, and several banks and investment firms are competing for a share of their surplus funds as investors into their portfolio of companies. Having not reached this level yet, I can only reflect on my observations as I begin exploring my own micro investments into startups, as well as working with VCs and Private Equity firms as a fractional consultant.
  • Barista FIRE:
    • Financial Solvency: Achieving financial independence is essential for Barista FIRE. By attaining solvency, individuals can transition to part-time or less demanding work that is more interesting while still maintaining financial stability. I saved enough to take 6 months off on a sabbatical when I was 27 to travel and live aboard. Again in at 38, I had enough saved and invested to take a 1 year sabbatical, except this time, I realized that I didn’t have to return to work at all having enough to be classified as having reached LEAN FIRE, so I retired early from my career in Banking and Fintech and began to explore what next to do with my life.
    • Financial Stability: Building an emergency fund provides security during the transition to Barista FIRE. Having savings equivalent to six months or more of living expenses ensures individuals can cover their basic needs during partial retirement. At the time of my sabbatical at 38, I had about $250,000 in spare cash to allow me the time to work out what to do, along with other investment property and stocks that that paid me a passive income to cover my living costs.
    • Debt Freedom: Eliminating bad debt is beneficial for Barista FIRE. By reducing financial obligations, individuals can minimize the amount of income needed to sustain their lifestyle, allowing for greater flexibility in retirement, as there don’t have to worry about financing their debt. During my sabbaticals and Barista FIRE lifestyle stage3, as I wasn’t able to clear off my debt yet without selling off some assets or moving my money around, I utilized credit card balance transfers to move my debt into a a longer interest free term, to cover my time off, as well as making larger repayments to reduce and clear my debt during the interest free period. NB: There is often an upfront fee or interest payment to arrange this kind of alternative finance. If you have a mortgage on your home, then consider renting out the property or put it on Airbnb if possible, while you stay somewhere cheaper or travel, and leverage any negative gearing tax benefits available to you in your country… as I did.
    • Financial YOLO-FOMO: Barista FIRE allows individuals to pursue their passions while still earning income. By investing in experiences that align with personal growth and fulfillment, individuals can enjoy a balanced approach to early retirement. I did a lot of travelling to see the world, and invested time to learn new languages, cultures and skills during my 20s and 30s… while still ensuring I saved and invested to maintain a happy balance. This is why I immigrated from Sydney Australia, to UK and London, and I worked and played my way through Europe too. I also travelled to the US and sometimes combining holidays with work and conferences where I was earning and learning at the same time.
    • Financial Security: Barista FIRE provides a compromise between work and leisure. By achieving financial security, individuals ensure they have the flexibility to enjoy retirement while maintaining a source of income through part-time work. The lifestyle and illnesses suffered by my parents from working so hard when they were younger, led me to realize that you need to enjoy you life while you still can or have the health to do it. Don’t put off living your life, so you can work hard and earn money, if what you’re doing isn’t fun. Instead work hard on finding your passion and then work out how to make that your lifestyle. I really didn’t want to end up like my parents did. This is why I invested heavily in my financial education. I took the time to learn about money and build wealth. This is the best investment I have ever made, over and above my the money I’ve made from my stocks or real estate investments over the years.
Julie Choo-Leconte

Personal Reflection:

This progression from normal FIRE or Financial Freedom to FAT FIRE and Financial Abundance, is actually a big jump, if you aren’t comfortable with taking risks. As I have discovered, FAT FIRE is mostly achieved in two ways:

Inheritance: This is where there is generational wealth in your family and you get this support and financial backing to do as you wish with their money gifted to you.

Business: This involves having your skin in the game where you leverage your money to build an enterprise or entity that provides a service produces a product that make revenue and profit, or accumulates enough data to give this business a multiplier effect, and thus multiplying your money or investment (known as capital gain) substantially by 3X, 10X or 100X, while the business also pays you a sizable income regularly for the role you play or the work you do, which you want to be tax efficient of course. It’s different from investing in stocks where you typically gain a dividend yield of between 4% to 10%, influenced by financial market conditions.

As I have not much in terms of inheritance to speak of, I am currently an entrepreneur and building my own business to potentially increase my wealth and thus making my way slowly to the next level of financial freedom. In fact, I have a portfolio career, so I will do some extra fractional work or consulting, to help me fund the extra things that I want to enjoy in my life, such as upgrading to business or first class travel.

But be warned, entrepreneurship is a hard journey and not for everyone, as it involves many long hours of work in the early stages and there is no guarantee of success, especially if you plan to achieve multipliers at the 10x or 100x levels. Some people might prefer to stay small, building lifestyle businesses that form a part of their portfolio careers, with multiple smaller additional incomes sources, some passive and others semi-passive, while living and enjoying their life. For now, this is me 😇.

Who Is FIRE Designed for?

The FIRE (Financial Independence Retire Early) movement offers an enticing path to early retirement and financial freedom, but it’s important to acknowledge that it may not be suitable for everyone. Not everyone can easily embrace FIRE, as it’s primarily designed for those willing to commit to dedicated financial and lifestyle choices.

FIRE is ideally suited for the average worker who seeks to break free from the traditional retirement timeline. It appeals to those who are prepared to save diligently, practice frugality, and make consistent financial decisions to achieve the freedom to enjoy life and pursue their passions earlier.

However, it’s crucial to recognize that achieving FIRE requires discipline, careful planning, and a strong commitment to long-term financial goals. While it’s attractive to those who prioritize financial independence, individuals should assess their personal circumstances and priorities before embarking on the FIRE journey, as it’s not a one-size-fits-all solution.

Is FIRE for me?

Deciding if the FIRE (Financial Independence Retire Early) journey is suitable for you involves considering your financial aspirations and lifestyle choices. While it appeals to those who aim for early financial independence, it’s not a universal solution. Many FIRE enthusiasts emphasize the importance of building a substantial emergency fund to handle unexpected expenses, which offers financial security along the path to early retirement.

Furthermore, early retirees often embrace frugality and commit to saving a significant portion of their income, which may not align with everyone’s spending habits or career objectives. It’s crucial to assess whether your financial goals and readiness to make lifestyle adjustments harmonize with the tenets of FIRE before fully committing to this route. Your decision should revolve around your specific circumstances, financial objectives, and the level of determination you are willing to invest in realizing financial independence and early retirement ambitions.

Ultimately, the decision to pursue FIRE should be a reflection of your individual circumstances, financial goals, and the extent to which you are dedicated to achieving early financial independence and retiring on your own terms.

5 More Tips to Achieving FIRE

Steps to Achieve Financial Independence

  1. Budgeting and Saving: The first step toward FI is to create a budget that ensures you spend less than you earn. The surplus should be saved and invested wisely. Retiring early requires careful scrutinizing of our annual income and saving wherever possible.
  2. Investing for the Future: Investing in assets like stocks, real estate, and retirement accounts is crucial to grow your wealth over time.
  3. Reducing Debt: Reducing and eliminating high-interest debts, such as credit card debt, is essential for achieving FI.
  4. Researching any and all means to increase your savings: To retire early, we need to research and find ways to effectively budget and save. Some examples of what FIRE followers use to save are tax advantaged retirement accounts, asking your company to help you purchase high cost assets to reduce your tax.
  5. Building Multiple Income Streams: Diversifying your income sources can accelerate your journey to FI.
5 steps infographic to achieve financial independence for early retirement by

How to Combine FI and Early Retirement

Balancing financial independence with early retirement can be a challenge. Transitioning from FI to early retirement requires careful planning and consideration.

The Road to Financial Independence and Early Retirement

Challenges and Obstacles

The path to financial independence and early retirement is not without its challenges. Overcoming roadblocks and staying committed to your goals is crucial.

Staying Motivated

Finding motivation and celebrating milestones along the way will help you maintain the momentum and stay dedicated to your FI and early retirement journey.

Success Stories

There are numerous success stories within the FIRE movement. People from all walks of life have achieved financial independence and retired early. The story of Raj who turned 40, managed to accumulate a portfolio of $1.2 million before quitting his job and working a more comfortable lifestyle. I have shared some of my own journey in this article with key examples too .

Limitations of FIRE

FIRE (Financial Independence Retire Early) is an appealing concept, but it comes with limitations that individuals should be aware of. One key limitation is the requirement for extreme saving, which may necessitate substantial lifestyle adjustments. Achieving a high savings rate is vital for FIRE, and this might mean cutting back on various expenses to maximize your savings. However, this approach can be challenging for those who have already committed to a specific lifestyle.

Another limitation of FIRE is the need to carefully manage your finances post-retirement. FIRE followers often rely on their investment portfolios to sustain their retirement income. While this can be effective, it also means having to monitor and manage these investments closely. Additionally, withdrawing money from your investment accounts needs to be done thoughtfully to ensure that your retirement funds last as long as needed. This level of financial vigilance may not suit everyone, and it underscores the importance of having a well-thought-out financial plan before embarking on the FIRE journey.


In conclusion, achieving financial independence and retiring early is a dream that can become a reality with determination and discipline. The FIRE movement provides a roadmap for those who want to gain control over their financial future and live life on their terms. Please add personal THOUGHTS of FIRE HERE TOO IN THE CONCLUSION

Frequently Asked Questions (FAQs)

  1. What challenges might I face on the road to financial independence and early retirement?
    • Common challenges include overcoming roadblocks, dealing with criticism, and staying motivated to reach your goals. One of the biggest setbacks is keeping your spending to a minimum. Setbacks can happen in life and keeping yourself away from shiny objects is a must for FIRE followers.
  2. What are some ways to reduce debt?
  3. What are some budgeting strategies people use for FIRE?
    • Budgeting strategies are important to get started on FIRE. Typically speaking, most FIRE followers will follow the way that maximizes their income and earn more money overtime with the zero based budgeting method. I explore this method as well as give examples of how it works here.
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