Start These Two Steps To Join The FIRE Movement In 2024—And Eventually Quit Your Job

Financial literacy is learning the rules of money, while financial independence is learning how to win the game at money. It’s not a new concept, but it can feel far fetched in 2024 when more than 60% Americans are reporting living paycheck to paycheck, according to a LendingClub report.

The habits rooted in the principles of the FIRE movement —short for financial independence retire early can be traced back to Vicki Robin and Joe Dominguez, who authored the book Your Money or Your Life in 1992. Robin and Dominguez promoted spending retirement years enjoying hobbies, family, and friends instead of working into the age of sixties.

I was personally introduced to the FIRE concept when I attended my first FinCon in 2019, an event for Creators in the personal finance space. I watched financial experts on the main stage like Ramit Sethi and Tanja Hester, who many credit as role models for their introductions into personal finance exploration.

The idea of not working into my sixties was certainly intriguing, but it felt incredibly out of reach for a first- generation Filipina American. Perhaps like me, you have never personally met someone who successfully retired with enough money, let alone retired early. My father was forced into retirement in his seventies after the advertising company he dedicated decades of long hours decided to restructure his role and save his salary to increase their bottom line.

On the other side of the spectrum, you may have met more wealthy people, who despite having enough to retire, work even harder. Growing up in New York City, I felt the pressure to show how much I was working to prove I was somebody important. After I burned out and decided to get a master’s degree in business.

Stories of a classmate still taking her final exam while getting ready to go into labor at the hospital, and a poster child CEO who did not miss his Board meeting even though he collapsed from a health condition were both praised for being committed and ambitious. Early retirement is often viewed as being lazy for choosing not to make more money.

It was that same MBA program that precipitated my interest, or rather panic, in personal finance when I finally logged in and found out I had over $72,000 in student loans and that they were accruing interest daily. With the average student loan balance at $28,950 owed per borrower, financial independence may feel even more far fetched if you are saddled with student loans and other types of debt.

Starting The First Two Steps of Financial Independence

Before you write off the idea of financial freedom, I share these two steps that helped me become debt free including my home mortgage by age 34, cultivating the habits that can lead you toward financial freedom. They must be consciously balanced and re-balanced to feel true freedom.

The first step is to calculate the mathematical measure known as net worth. Simply put, net worth is everything you own minus everything you owe. The difference is your net worth:

What you own, referred to as assets, include things like:

• cash in checking and savings;
• investments;
• retirement accounts;
• car;
• home if you own it
• valuables such as art, collectibles, or jewelry you’d be willing to sell for cash.

On the other side of the equation is everything you owe, often referred to as liabilities or debt, including:

• credit card balances;
• personal loans;
• student loans;
• car loans;
• mortgages; and
• medical debt.

Therefore, Assets – Liabilities = Net worth. Start training yourself to think about is objectively speaking your wealth being measured by this one number, your net worth. Thee vast majority of people I’ve coached rarely know this number accurately, and therefore make financial decisions based off of generalities rather than the specifics of their unique situation. It’s like asking a doctor for a medical diagnosis without ever doing a physical to measure your heart rate, your weight and your various blood tests. You must know your numbers to make good financial choices.

If math intimidates you, the good news is that the most math you’ll need is fourth grade level. If you can do addition, subtraction, multiplication, and division, you’ll be just fine.

The second step to start the road to financial independence is the worth that most financial experts ignore, but is arguably more important to measure. It’s mental peace knowing that you are making the best financial decisions for yourself. It is your self-worth, and re-defining what financial independence would feel authentically to you.

You cannot achieve true financial independence even if you had a billion dollars in the bank paired with very little self-worth. The beauty of self-worth versus net worth though is that you don’t have to become a millionaire to cultivate and grow it. You can start growing self-worth by writing down or drawing a picture of the answers to these questions:

• What would you do if you had more free time from working?
• Who would you spend more time with?
• Where would you want to go?
• What would you do less of?
• What does freedom feel like for you?

Even if you have no intention of retiring early, explore redefining the FIRE movement to mean “financial independence, relax every day” instead. Financial independence can mean having more agency over how you live your life. The shift in the words can make a huge difference even if you have to work, or still choose to, and look forward to pushing rest and rejuvenation higher up on your priorities.