What is the FIRE movement and how does it works ?

fire movement

The FIRE movement (Financial Independence, Retire Early) is gaining in popularity like never before. In a world in crisis where financial independence is becoming increasingly important, understanding the principles of the FIRE movement can be a real lifeline. Whether you’re new to personal finance or a seasoned investor, the FIRE movement could well change your perspective on money and freedom.

In this article:

  • What is the FIRE movement?
  • The 4 pillars of FIRE
  • The 4 types of FIRE
  • Calculate your FIRE number
  • Advantages and disadvantages of the method
  • Useful resources for getting started with FIRE

What is the FIRE movement?

FIRE stands for “Financial Independence, Retire Early”. It’s a philosophy of life centered on achieving financial independence that enables early retirement.

Where does the FIRE movement come from?

Born in the USA in the 90s, the movement has gained ground year after year thanks to blogs, podcasts and numerous books devoted to this lifestyle ethic. 

The main objectives of the FIRE movement are manifold: not only to free oneself from financial constraints, but also to live a life richer in experiences and freedom of choice: this is what the people of the FIRE movement call a frugal way of life, which is no longer solely centered on one’s work, in contrast to the paths taken by previous generations.

What is the aim of the movement?

At the heart of the FIRE movement is the idea of maximizing one’s savings rate by minimizing spending while investing the rest wisely. 

Contrary to popular belief, it’s not just about earning more money, but knowing how to manage, invest and grow what you already have. 

Followers of the movement generally aim to achieve a FIRE Number, which corresponds to a specific amount of savings and portfolio investments that would enable them to live comfortably, maintaining their daily lives without having to work.

The pillars of the FIRE movement

To achieve the FIRE movement‘s ambitious goals, several fundamental pillars guide followers on their journey to financial independence and early retirement. The 4 main pillars are :


The first step towards financial independence (according to FIRE) is to save a significant portion of your income every month: in fact, this is the cornerstone of the movement.

But unlike traditional savings, it’s not simply a question of putting money aside, but of maximizing your savings rate, which is the percentage of net income you manage to save.

Some followers of the movement achieve an impressive savings rate of 50% to 70%. The aim is to live below one’s means in order to accelerate capital accumulation.


Saving alone is not enough: the money saved must be invested wisely to generate returns and passive income, i.e. provide regular income without additional work.

So what are the best investments?

The first investment for a FIRE investor is often the stock market! With the stock market, our investor can start investing capital without having to borrow and buy company shares.

To simplify the task, it’s common to turn to ETFs (index-tracking funds that aggregate a number of safe stocks) or to select dividend-paying companies.

The other investment is, of course, real estate!

Whether it’s a traditional investment in real estate, or paper real estate through SCPIs (real estate investment trusts), this remains one of the most popular investments for building wealth and generating regular income with a good return.

With rental property, the new follower of the movement can be sure of collecting rents and dollars without any real extra work, once the property is rented out.

Also read: 7 books on real estate investment

With SCPIs, it’s even simpler: SCPIs are securities, meaning that the owner doesn’t actually own any physical real estate, but simply a share in real estate property, guaranteeing a rental payment in proportion to the value of that same security.

Whatever investments are chosen, the idea is to adopt a long-term investment approach that can withstand market fluctuations. The ultimate goal is to create a diversified, resilient portfolio that can provide sufficient income to cover life’s expenses.


Reducing unnecessary expenditure plays a crucial role.

Our consumer society pushes us to have more and more material goods.

One way of dealing with this over-consumption is minimalism.

However, minimalism doesn’t necessarily mean depriving oneself or owning as little as possible, but rather making conscious choices about what really contributes to quality of life.

A simple example concerns your wardrobe: instead of owning tons of clothes, you can make do with the essentials: a pair of pants, a man’s shirt, a solid pair of shoes.

So, if you decide to embrace the FIRE movement, you’ll find that you need to eliminate unnecessary spending and focus resources on what brings value and happiness! That’s what minimalism is all about: cutting costs, but also appreciating what you have more.

Read the article: What is financial minimalism?

Side hustle

This is not inherent to all members of the FIRE community, but a good proportion decide to increase their income to accelerate the arrival of their financial independence.

So how do they go about it? It could be an extra part-time job, freelancing, or even setting up a small business, usually operating online. 

A side hustle can also act as a safety net in the event of unexpected changes in a person’s financial situation: an extra lifeline in case of need.

Ultimately, by strategically combining these pillars, FIRE followers create a solid plan to achieve their financial goals and live more independent, rewarding lives.

The 4 types of FIRE

The FIRE movement is not monolithic: there are many variations to suit different lifestyles, needs and financial goals. And it makes sense: not everyone can fit their personal situation into a single way of spending their money.

Here are some of the most popular types of FIRE:


Lean FIRE is an approach that focuses on reducing expenses as much as possible to achieve financial independence with a lower FIRE Number.

This is arguably the most “complex” version to implement, since the strategy relies on drastically reducing your spending: unless you take little or no pleasure in your consumption, Lean FIRE can be hard to get started with.

However, this is the option often chosen by those who are prepared to live more modestly in retirement, and who prefer to concentrate on simpler pleasures than those generated by spending.


In contrast to Lean FIRE, Fat FIRE implies a more luxurious lifestyle in retirement, requiring a higher FIRE Number.

Fat FIRE enthusiasts seek to maintain or even improve their current quality of life after retirement.

Fat FIRE can be contrasted with Lean FIRE in their operating modes.

Barista FIRE

This term refers to those who have achieved a degree of financial independence but continue to work part-time or in a less stressful job to cover certain expenses and maintain a source of income.

It’s no coincidence that the word Barista is used: it could be a reference job (bartending) done to cover expenses without pressure.

Coast FIRE

In this variant, individuals have accumulated enough assets for their investment to grow naturally up to a traditional retirement age, without needing to save more.

They are free to work as they wish without worrying about savings.

How do you calculate your FIRE number?

We’ve been talking about it since the beginning of this article, and now it’s time to explain what the famous FIRE number is! The FIRE Number represents the amount of money you’ll need to live comfortably without having to work.

Calculating this figure is an essential step for anyone wishing to join the movement. Here’s how:

1: Evaluate annual expenses

The first step is to draw up a precise balance sheet of your annual expenses. This includes everything from monthly bills to unforeseen expenses. You need to take into account your mandatory expenses, your hobbies, your miscellaneous expenses…  

A good technique for tracking your annual expenses is to analyze your last bank statement! This will give you an idea of how much your life is “costing” you.

2: Determine your secure withdrawal rate

The safe withdrawal rate is the percentage of your portfolio you can withdraw each year without depleting your savings. 

An often-quoted reference rate is 4%.

Please note, however, that this is an average, and the rate may vary depending on your situation.

3: Calculating the FIRE number

The calculation is quite simple. 

Take your annual expenses and divide them by your safe withdrawal rate. For example, if your annual expenses are €40,000 and you use a secure withdrawal rate of 4%, your FIRE Number would be €1,000,000 (€40,000 / 0.04).

4: Make the necessary adjustments

Be very precise in your calculations, and don’t forget to make adjustments: for example, the rise in inflation in recent years may mean that you need to re-evaluate your FIRE number frequently, as your expenses will increase. 

As we age, other factors such as health and travel may adjust this figure.

Online tools and calculators are also available to help you estimate your FIRE Number more accurately, taking into account various parameters such as life expectancy, expected returns and more.

You can use this free calculator to calculate your estimates: https://www.playingwithfire.co/retirementcalculator

The advantages and disadvantages of the FIRE movement

As with any life philosophy or financial strategy, the FIRE movement has advantages and disadvantages that everyone should keep in mind.

Advantages :

  1. Financial freedom: one of the most attractive benefits is financial freedom! It allows great flexibility in lifestyle choices, whether you’re traveling, changing careers or devoting time to personal projects.
  2. Time for leisure and family: early retirement will give you more time for leisure, sport and family, and enjoy what you really love. There’s no doubt that this lifestyle will increase your daily happiness.
  3. Reduced stress: the absence of financial pressure can significantly reduce the stress associated with your work, debts or other financial obligations.

Disadvantages :

  1. Risk of isolation: taking early retirement can sometimes lead to a feeling of isolation, especially if your loved ones continue to work.
  2. Strict financial discipline: Achieving the goals of the FIRE movement requires strict financial discipline, which is difficult to maintain over the long term, and not everyone is prepared to take on!
  3. Economic uncertainties: Market fluctuations and inflation can affect your FIRE Number and therefore the viability of your early retirement. As a result, your calculations and estimates may be skewed, putting you in a difficult situation.

Resources for getting started with the FIRE method

If you’re intrigued by the FIRE movement and want to learn more, we recommend you check out these resources to help you begin your journey to financial independence.

Blogs and websites

The number of blogs dedicated to the FIRE movement is growing daily. But if we had to name the most famous, we could mention Mr. Money Mustache or “The Simple Path to Wealth”. 

They may be in English, but that’s where you’ll find the best tips, testimonials and concrete strategies for achieving your goals.

Books on the FIRE method

We give you 3 books that offer profound insights into money management and financial independence: 

  • “Your Money or Your Life” by Vicki Robin and Joe Dominguez
  • “The Millionaire Next Door” by Thomas J. Stanley


The best podcasts about FIRE are ChooseFI and FIRE Drill Podcast.

A compendium of practical advice and testimonials from experts and movement enthusiasts.

Online communities

Forums such as Reddit have sub-forums dedicated to the FIRE movement, where you can ask questions and share experiences.

We’re talking about the most important communities, but if you do your research on the Internet, you’ll probably find a plethora of them.


How to calculate the FIRE number?

To calculate your FIRE Number, estimate your annual expenses and divide them by your safe withdrawal rate (often 4%). For example, if you spend €40,000 a year, your FIRE Number will be €1,000,000 (€40,000 / 0.04).

How do you achieve financial independence?

To achieve financial independence, maximize your savings rate, invest wisely to generate passive income, adopt a minimalist lifestyle and consider additional sources of income (side hustles).

Are you interested? Would you like to try the FIRE method to become financially independent and no longer dependent on your job? Then go for it! But be sure to take into account all the steps you’ll need to follow to get your transition off to the best possible start, and bear in mind the sacrifices required by the FIRE movement: financial freedom isn‘t achieved overnight!

Jordan Houi
Article by

Jordan Houi

Passionate about savings and investment topics. I modestly try to offer you simple, sometimes not so simple, solutions to beat inflation.

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