A Beginner’s Guide to the F.I.R.E. Movement

be clear. Fire is not a get rich quick scheme. It requires patience, discipline, and a really strong commitment to a long term financial strategy. So in today's episode, I'm going to break down exactly what the Fire movement is all about, the benefits, the challenges that come with it, and most importantly, give you a step by step guide to follow so you can see for yourself how you

can start working on your own financial independence. So relax, sit back, and let's talk about this very powerful, exciting movement that's changing people's lives forever. All right, First of all, let's kick off and just explain the basics the one io one of what Fire really is. So Fire stands for financial independence, retire really and the core principle behind

it is very simple. It's about saving and investing aggressively now, earlier in life, so that you can build enough wealth, a great fat nest egg, to be able to quit your nine to five job and just live a life on your own terms. Now, traditionally, we most of us, have been told, and we've witnessed through our parents and perhaps our grandparents and great grandparents, that we work until we are sixty five in some cases seventy, and then when we retire, we live off our savings or superannuation,

or sometimes a government pension. So the Fire movement completely challenges this, It turns it upside down, and it's about encouraging people to take control of their financial future far earlier in life, and actually, you know, not have to wait until you're in your sixties or seventies to actually

enjoy the fruits of your hard work. Work hard now, go aggressively, and then retire early and actually be able to be young and fit and full of energy to enjoy all the fruits of that hard work, not delaying until later in life. Now, Fire isn't a one size fits all, which I think a lot of people assume when they first hear about it. There are different types of fire, which I'll explain in a moment, but some

people really aim to retire extremely early. I've seen situations whe people that have retired in their thirties or forties, whilst others actually want to reach financial dependence so they can have I guess a greater flow or balance, like work less, take more holidays, or have like a passion project on the side without having to have that financial stress linger. So that's essentially what the fire movement is. It is about financial independence earlier in life. Now, why

would you want to do this? Well, okay, there are a few reasons why someone want to pursue the fire movement, but here are just a few. The first one, obviously is freedom over your time. You no longer work by force, you work by choice. You have enough income to pay the bills, You can decide how you want to spend your time, whether you want to go to work today or whether you want to maybe go on holiday tomorrow.

So it really brings back that choice and that freedom and that time and even a luxury back to the person who's controlling their fire. The second benefit to fire is obviously less stress about money. Financial independence means having enough money to cover your lifestyle without actually having to rely on earning a paycheck from somewhere else or by

physically doing something. It's really about building passive income. Passive income is money that you earn whilst you sleep at night, so you completely eradicate that sort of pressure and stress to have to go to a job every day and show up and put a suit on, or stare at a computer screen, or work with people that you don't necessarily like. The other thing is it gives you more

opportunities for personal growth. When you're not tied up to a full time job, you have obviously more time to explore those passions, those hobbies, travel, even start a business on the side. You have this choice with fire and then of course allows better work life balance. You may not necessarily want to completely retire and up shop, but instead you might want to maybe look at part time work, or look at doing some passion projects or even doing

some volunteers. So it doesn't necessarily mean you completely quit the workforce, unless of course you want to. But you

just have a complete flexibility. You might decide, okay, well I'm going to take a six month contract job, but then for the remainder of the six months of the year, I'm going to actually switch off, relax, do some courses, do some charity work, and of course travel so you have a greater sense of work life balance, and of course that closing improving your own health and fitness along the way. So now that we've spoken about the benefits of firelet it's actually talk about the negative side, the

challenges of fire. Because there are challenges of fire. There is a reason why not everyone is part of the fire movement, and I'd say these are the key reasons why people get stuck or don't commit long term to see the results and all the beautiful benefits. So all right, the fire lifestyle is not really for everyone. It requires

extreme discipline and patience. You have to be incredibly intentional about saving and also saving and investing, and for most people like myself as well, that includes cutting back, cutting back obviously on luxuries, but also cutting back on things that are sort of in between needs and wants. You've also got to be incredibly patient. The more financial freedom you want, the more passive income you want, the more time it's going to potentially take all the biggest sacrifices

that are needed. So you need to understand that and make peace with that and accept that if that's what you want, you've got to build it. If it was that easy, everyone to be doing it. The other downside of the fire movement is the potential for burnout. And this is something again i've actually seen a lot of.

So you know, initially people are full of motivation, which is fantastic, but three months in a year in some people have had to go to such extreme lengths, you know, juggling multiple jobs and saving you know, up to say, seventy percent of their income. This ends up being exhausting and when you're going at this aggressive pace, it is not sustainable. And the problem is when we're burnt out, a couple of things tend to flare up. We then have a blowout where we undo all our hard work.

You see that often with people who've been trying to pay off debt aggressively and then they just something happens and they get a trigger and then they go and blow it all on new credit card debt, and you know, they're back to almost square one again. It's exactly the same with any strict diet where you've got to cut

out huge amounts of your normal every day diet. You do it for a week or two, maybe three, and then you just something happens and you know, you overindulge in all of those things that you try to cut out. So you've got to be very careful of having a finger on the pulse with burnout. And I'll come and talk about that in a second. The other downside of fire, and this is a really big one that no one talks about enough, and that is inflation and market risk.

So the thing with the fire community, it's not based on necessarily just savings, no cash accounts. If you want long term financial freedom, you've got to be investing. And typically for a long term financial freedom independence has got to have a certain amount of risk involved, which typically falls into the the property market and equities. So the investment portfolio you're building and creating that passive income has

got to last for decades. And if you're dealing with these types of assets like for example, shares and property, these are assets such are naturally and it's very normal to be very volatile. They have downturns, and those downturns can be dramatic and can really create an emotional reaction in a negative way that then triggers a knee jerk

reaction that often comes with a regret. So you need to understand what the risk versus reward equation is, where it fits with you, where your risk profile is, and you invest accordingly, and you're also ready to weather the storm when those market downturns hit. The other important element

of this is the rising costs. So this is where a lot of people who've thought they set themselves up for a lifetime of fire actually sadly and unfortunately, and I don't say this to patronize them, but they've basically had to go back to work because the rising cost of living and the recent impact of inflation has really eroded into their strategy. Now this doesn't mean it's completely

you know, you can't avoid this from it. You need to understand the impact of inflation, the impact of rising costs, and make sure that your portfolio and your financial strategy prepares for this in a proactive way and you know how to navigate it if you hit certain boundaries where you see your investment portfolio being hit with volatility and

of course the rising cost of living. This is why it's so important to make sure you build enough passive income, ideally a little bit more passive income than what you need, so that you never eat into the capital and you never force into a situation where you have to crystallize losses and sell things because your passive income no longer covers your cost of living because of inflation. So always obviously keep that in mind. But you need to prepare

for this and have safety nets in place. And of course a lot of people don't realize if you set yourself up for financial independence retirement early earlier in life, sand your thirties, you need to also keep into consideration your natural lifestyle evolving. I know one person in particular who created successful fire strategy in their late twenties early thirties. Everything was going great. They had so much freedom, so

much time, so much choice, so much travel. And then they met someone and they decided to have a family, and seeing what their cost of living changed you with children with childcare, with having to have a bigger home with more bedrooms, that person had to return back to work. Of course, they didn't have to return back at the same pace that their friends were to keep up with the living expenses, but their fire strategy wasn't able to evolve with them. Not that that's necessarily a bad thing

at all. I don't think so. I think it's an exciting thing and great to be able to back in the workforce and using your brain. But you need to keep that in mind. How much flexibility do you need for financial independence? How much do you want and you will things like retiring, maybe having a healthcare scare, maybe wanting to live in a different country where there are different tax rates and different cost of living. How is your financial fire strategy going to evolve with you and

your needs? Think about these things if you want a really robust one. And then the fourth downside i'd say of the fire movement is social challenges. Not everyone is on board with the fire movement. Again, again, if everyone, whiles everyone be doing this, there are going to be family and friends who may not necessarily understand your choices.

If they see you being incredibly frugal with your spending, they see you aggressively saving every penny, They see you investing every dollar and maybe taking risks with it comes to investing that they wouldn't necessarily take themselves. You may find it a confronting experience and it can at times

feel isolating. However, whilst these people may not understand what you're doing or may judge you even or think that you're missing out on amazing opportunities in life, such as travel or those spontaneous that ativities like going to a concert and all those wonderful things, you also need to know that you actually have a lot of power within you to inspire those people who may be judging you

or maybe criticizing your personal financial decisions in life. So understand that it goes both ways, but it definitely can be isolating, particularly if you're having to say no, I can't come to dinner, or no I can't go to that concert, or no, I can't go on a holiday this year. It can feel incredibly lonely. But again, turning to a community online is a great opportunity to help find that support and also obviously that motivation to keep going.

And I say, for someone who's been investing for a very very long time, not just as a financial planner but myself personally, and if you can push through these particular challenges or downsides, the rewards are most definitely worth it. I never have regretted investing, all right, So let's move on now. To a step by step guide as to

how to do fire for yourself. Now, this is the one step that I think a lot of people miss because they just are so motivated and decided to get started, and if they haven't done this, when they hit challenges, this is where things can start to go wrong. So in best time, please and listening to step one and doing something about this. So this all starts with your mindset. So the first step is understanding fire is a marathon,

not a sprint. There are going to be moments of frustration, disappointment, sacrifice, and even boredom, and you are going to be it's like watching paint dry when you're watching your investment portfolio grow. But if you can stay committed, dedicated, keep showing up, this is essential and your future self will most definitely

thank you. So what I would recommend for you is to do a list, a list of at least ten points as to why you want to do this for yourself, so that your mindset shift happens and you understand what you are doing and why, so that when those setbacks and challenges happen, you are strong, you are resilient. Yes, they may get you down for a day or two. But once the clouds pass, you're back on it and you hit the ground running again because you know your why.

So bullet point, why do you want financial freedom and independence? Perhaps it's something really deep and personal. You want to break the pattern you maybe grew up in poverty or grew up in a financially volatile environment. You want to create consistency, You want to create stability, you want to create peace of mind. Also, you might think, well, I really am passionate about helping people. This is going to help me. Having financial freedom and independence is going to

allow me to give back. It's going to give me more time for my children. It's going to allow me to afford to educate my children or educate my grandchildren. Least at least ten important points to you as to why this is important to you and what your true why is really about, and go as deep as you possibly can. The more you write down, you'll be surprised how much more flows, and how much more was lingering around in your heatheart and soul that you now actually

understand about yourself. It's quite beautiful experience, So please do this mindset work. Step number two is to know what type of fire you want so before you start, you've got to get clear, crystal clear. There are various versions of fire, so you need to work out which one actually resonates with you. So here are just a few

to consider. Number one is the lean fire movement. So this means living off a minimal budget, literally living off the scent of an oily rag, and you aggressively save and invest absolutely everything in order to be able to retire as soon as possible. Now I should point out with the lean fire strategy, yes you are living in a very lean way, but you're also creating a very lean fire strategy because you're trying to retire as soon

as possible. You may have actually not given that passive income a love time to flourish and grow and compound to give you a comfortable fire strategy. So yes, it means living lean today, but also potentially living lean tomorrow as well. Not necessarily a bad thing, but for people who are happy to live on a very type budget, they like that that fits in they're with their lifestyle.

This is potentially the path to choose because obviously it means they can retire earlier, but they're also be able to maintain that type budget for the rest of their lives. The second one is the fat fire movement. So this means of course saving and investing aggressively, but you're doing it more to retire with a higher standard living, so it's sort of one up from the lean fire strategy.

You are trying to build more passive income so that you have greater freedom, greater choice, more time, more luxury. This is probably one of the ones which I probably recommend and probably resonate with. Then of course there is the coast fire strategy. So this is reaching a point where your investments grow on their own and allow you to slow down without having to stress about additional savings,

so you are in on a regular basis. It's not necessarily as aggressive from a time point of view, but you are being consistent over a longer period of time, and you are focusing on the power of pounding interest where you can get to that sweet spot where that passive income now grows on its own. It's being reinvested, and you can obviously take some of that income if you don't want to reinvest it with it adding value to your life and never involves tapping into the actual

capital or eating into your savings. So the Coast fire strategy is very much focused and it has a strong bias towards long term growing passive income for that freedom. Then there is the Barista fire, and I think this is one that I think is a really healthy one that I think is really achievable, and I think would fit into a lot of people's lifestyles, particularly you know, people who are having a family. So this is enough having enough financial freedom in order to be able to

cover most of your living expenses. But you still need to work, but maybe on a part time basis or on a sort of a contracting basis, so you still have your finger on the pulse. You're still getting experience in the workforce, you're still adding value to the world. You're still acts of service and doing all those important things you might have like a business that you work on part time, or you might have a part time job,

or you're doing contracting work. But your living expenses are also supplemented by that passive income or that investment portfolio that you have built over time. So the last three ones I think are I think the most healthy. You know, I'm coming from someone with twenty two years experience in financial planning. They allow their realistic. I feel they allow the best of both worlds. They allow you to keep using your brain, keep making sure that you have your

skills there, you know, adding value to the world. But also it understands that your life is changing and evolving and you're still building up that passive income. You can still have that, particularly with a burist one, to earn extra money that you continue to contribute towards your investment portfolio. So you need to spend time exploring which one resonates with you the most, and which one you decide that you want to jump on and be as part of

your own financial strategy. And of course you can. You don't have to pick one to stick to it over time. You might want you to go start with a lean one, the lean fire movement, and then move towards, say the coast fire movement. It's completely up to you. But understand the different different categories and which one resonates with you the most. You don't necessarily into pigeonhole yourself. Then step number three, and this is the most important one we must all do if we want to do this, that

is to start start investing. Start investing as soon as possible, but invest consistently. So the key to fire is making your money work for you. That is passive income, and this means investing in assets that generate passive income such as tibot ends, rant earning interest. So these types of assets to create that passive income are stocks, they are ETFs, listed investment companies, investment properties, and of course high DAN

savings accounts or even bonds for security. So you really need to focus on the assets that will provide few long term sustainable growth and sustainable passive income through cash flow so that you don't actually have to actively rely on yourself to actually earn and make money. But I will say this, if you want long term growing, sustainable financial freedom and independence, you've got to be looking at

two dimensional assets. Now I've spoken about this and lots of other podcasts, so if you want to learn more, definitely go listen to my episodes on investing in listen investment companies, investing in shares, investing in property. But essentially, a two dimensional asset is an asset that grows in value.

So you know, a stock that grows from say ten dollars to eleven dollars, but it also creates an income stream and that income stream grows with the capital growth, so that ten dollars stock may pay, for example, fifty cents for the one year the stock goes up for simplistic terms, to eleven dollars. Next year, that passive income, that dividend is now fifty five cents. See how you've

got two sets of growth happening. You've got growth in the passive income, the dividend income, and you've got growth in the capital value. Now, of course, yes, shares, property, these two dimension types of two dimensional assets are volatile, and they are long term investments. They're not selling you'd invested in for say two years, five years, or even I think seven years. They are long term growth. But my point is you want your passive income to be

growing organically. You want that passive income obviously to be in reinvested, which helps it grow, but you want to have that element of two dimensional passive income growth. That will then mean with your passive income that you live off, it can help keep up with inflation, or even better, it exceeds inflation, so that you always earn more passive income than what you want. And that is what I would actually call the Rolls Royce fire strategy, which is mine.

Now I will talk about this at the very end of the episode my own financial strategy, the Rolls Royce one that I'm ultimately working towards, and if you like, I will do a separate episode, but you need to let me know if you actually want that. But I want to continue on with the steps as to one on one on the fire strategy. So step number four, if you want to do this, is you've got to increase your income. Now, as I mentioned, we need to invest. So how do we start investing if we don't have

any money to invest? And this is why I say step four, You've got to increase your income. Whilst savings is obviously crucial for everyone's financial well being to a certain degree, you've got to earn more so you can accelerate your fire journey. That is, earn more money so you can invest more. So we need to think outside of the squares to what additional things you can boost

your income. So things like starting up a side hustle, doing some freelancing or consulting work, asking for a pay rise or a promotion, or applying for a new job, up skilling, investing in yourself, doing some additional training, and you may be a deployment or a graduate diployment, or even looking into a master's to increase your earning potential. The more income you can earn, the more money you can then funnel into investments, which means you're going to

reach financial independence so much sooner. But I will point this out to come back to one of the downsides of risks. I touched on the concept of burnout, which is what a lot of people have done in their financial strategy when they've gone to aggressively too quickly. If you want to do something like this, take on a side huse le, do freelancing, take on an extra job, work a weekend, you invest in your skills, do a master's an NBA. You need to understand you've got to

look after your energy. Do these things if you can, imburst in spurts and the moment your body says all right, I'm exhausted, I'm tired, I need a break, listen to it and take that break. You never want to get to a point where you completely burn yourself out that you can't actually then enjoy your financial freedom and independence. You're burnt your run down, and this is when we become sick. And also when we're tired and run down,

we're not concentrating, and this is when accidents happen. So you really got to be in tune with your body, in tune with what your body needs. When you have the you're in the optimal zone and you are happy to do those extra hours, work that weekend shift, take on that new risk with your business, that's great. Do those then, But the moment you feel some pullbacks and push,

some signs that you're not well. You are starting to be tied, you're sleep deprived, you're not regulating your emotions like you normally would, that is your sign to slow down and give yourself a break. And that's why I like to apply the principle of burst and spurts to my financial strategy, my fire strategy, so that when I need to, I listen to my body and go all right, I've gone hard. I've like declutted a whole part of

stuff and sold it. I need a break. I need to catch my breath, I need to reset, I need to recharge, and that's when I'll just be quiet. It doesn't mean I got and spend a lot of money and under all the hard work. It just means I lay low for a bit, go under the radar and just sit. Let my investments stay as they are, don't touch them, let my savings stay there. I don't touch them, but I listen to my body, and I try to refuel my body in a really kind way that doesn't

involve money. Things like going to bed early, having a warm bath, jumping in the ocean, spending time with nature, disconnecting, doing a digital detox for a weekend. All those little things that helped me get my energy levels back, my focus back, and reconnect with my wife, as I talked about in step one, that mindset. And then step number

five your emergency money. As we have spoken about in many episodes, life can be incredibly unpredictable and the last thing you ever want to be is forced into position where you have to sell your investments because you didn't have enough emergency money or we didn't have any emergency money. You must have a separate, dedicated savings account purely for emergency and yes, if you have a mortgage, the redrawer or offset account is fine as long as it's a

dedicated account purely for emergency money. Now, there is no Madam formula for how much emergency money you need. Even though I have recently seen people recommend three to twelve months worth of living expenses, you need your own definition of financial security when it comes to emergency money. I know, for our family, when we had seventy thousand dollars worth of expenses come up, and actually we had more than seventy thousand dollars, it wiped all of our emergency money

because we only had seventy saved up. So that was a big wake up call for me to realize and reassess that as a family of five, Tom and I both work for ourselves, so we don't have no super guarantee, and we don't have annually or sick leave or long service leave. We needed more, and our emergency money I worked out to be was actually in excess of one

hundred thousand dollars. Whereas someone who is young has no financial responsibilities, you know does has maybe a lot of annual leaves saved up, has lots of sick leaves saved up. You may not necessarily need one hundred thousand dollars. You may only need twenty thousand dollars or twenty five thousand dollars, But sit down and work out how much emergency money

you need. And if you ever want to learn about this in more detail, mindful Money, I have a chapter dedicated to show you how to work out how much emergency money you need. But promise me this that emergency money is separate from your living expense account. It is separate from your holiday savings account, it is separate from your investing account. It is purely for your emergency money. Trust me on that you never want to just have to sell everything up because you didn't plan and prepare

for an emergency. Nobody is immune from emergencies, and no one is completely resilient and protected from emergencies. And no one has ever said to me, geez, I wish I didn't have so much money in emergency money. Okay, And then step number six, the final step, track your progress and adjust so reaching financial dependence and retiring early. It's a long term game plan. It is not going to happen overnight. It might happen overnight, but it's highly unlikely

unless you win the lottery. But for this reason, it is so important that you track your savings, you track your investments, you track your growing passive income, and of course you track your living expenses. You've got to understand what you are doing and what is working and what is not working, and in that review process, make those tweaks and changes and adjustments. Look at what you need to cut down, what is creeping up, what is getting out of control, What is a potential challenge, what is

a potential risk. What investments are generating the best and most passive income for you is their ability to maybe to invest more in those assets so that you can achieve your goals sooner. You also need to track the progress for pure motivation. When you actually see that this is working, you now have your first thousand dollars a year in passive income, it is a really powerful moment because it is your sign that you are doing the right work and to keep going. And next time you

come back and you look at that progress. Now you earn fifteen hundred dollars a year in passive income. You can get excited. You can see that there is light at the end of the tunnel. This is working. All those sacrifices, its hard work, that commitment, the dedication is paying off. Your life is looking very different. Your future is exciting. Your future is filled with financial harmony and

freedom and luxury and time and choice. That is going to be your key source of motivation for when tough times happen, when those setbacks happen, when those challenges happen, because you can come back and see how far you've come in a very short period of time, and that will allow you to give you the faith and confidence to get back on the bandwagon. Sure, you might feel sad, you may feel frustrated, but you will go back to this game plan because you know it's worked, it pays off.

So there you have it, the beginner's Guide to the Fire movement. Whilst it definitely does take discipline at a shitload of patients, the ultimate reward at the end of the day is freedom. Freedom for you and I know for myself, freedom is priceless. Now, as mentioned, I call my own fire strategy Roles Voice strategy. It is something that I am working towards actively. Every day, I'm reviewing,

I'm tracking and adjusting and tweaking my strategy. I have my emergency money or building along the way bubbling away and I am constantly saving, reviewing my budget and investing. So if you would like me to make a special

episode where I share with you what my rolls. Royce Fire strategy is please leave me a rating review and say canna, please share with us your roles Royce Fire strategy because when I see those reviews and hopefully you give me a good rating, I pray I will then make sure that I make that as a priority for you, because I listen to what you say, I listen to what you want, and I always try and deliver it to the best of my ability for you, because I'm

serious about helping you guide you, motivate you, and inspire you to take better decisions with your money. Now, if you enjoyed today's episode, I would love it if you can make sure you are following this show, Sugar Mams Fireplay so you never miss episode. It goes live everyone Monday morning at five am, so that you start you'll week off on an inspired and motivated note. And of course, if you're enjoying listening to this channel, I'd love to hear from you. I'd love to hear about what you

want to hear more of. I'd love to hear what particular episodes you really loved, and even episodes that you didn't actually like. I appreciate your feedback. I promise you I will take it on constructively and yes, I promise you I will listen wholeheartedly. So please send me a message, maybe on Instagram or of course, as you said, you can leave me a rating review and leave your feedback there.

Now until next time, stay focused, stay patient, and keep working towards your own financial freedom and as always, keep that financial fire burning right with him. This is Sugar Moments fireplay