Do you want to retire early? ‘FIRE’ it up now
4 min read
Biju Mathew, an accomplished IIM graduate, began his professional journey with a prominent corporate firm in India, securing an impressive annual package of Rs 15 lakh through campus selection. His professional brilliance matched his academic prowess, making him a standout in his field. However, Biju harbored ambitions beyond the conventional career path. From the outset, he understood that work was not the entirety of life. Passionate about traveling and experiencing life fully, Biju was unwilling to “sweep” his life away by working until the traditional retirement age of 60.
The Bold Decision
At the young age of 23, Biju made a bold and unconventional decision: he would retire by the age of 35. This decision was not based on luck or inheritance but was a calculated move that required strategic planning and hard work. Unlike many Indians who traditionally aim to retire at 58, Biju sought to break the mold and achieve financial freedom much earlier. This ambition resonated with the changing mindset of younger generations, including Millennials and Gen Z, who increasingly reject the conventional perspective on work and retirement.
Changing Attitudes Toward Work and Retirement
New wage laws and the psychological pressures associated with modern jobs have driven many young people to emphasize that life should be about more than just work. The idea of dedicating one’s entire life to a career, which originated in foreign countries, has now permeated India as well. The FIRE (Financial Independence, Retire Early) movement, which began in the United States, has inspired many youths across India.
In January 2020, Mathrubhumi’s ‘Nikshepa Padam’ column explored the concepts of financial independence and early retirement, bringing these ideas to the forefront. Over the years, achieving financial independence and retiring early has gained acceptance as a viable and desirable lifestyle. A new world is emerging where work is viewed as a hobby or pastime rather than a lifelong obligation.
Understanding FIRE
Achieving financial independence, or FIRE, involves carefully managing your spending and strategically allocating funds for investments. In essence, FIRE is about creating a sustainable income to support your lifestyle after retiring from active work. Initially, you earn income through employment, but over time, your investments generate a steady income stream that sustains you in the future.
This financial outlook is particularly advantageous for individuals working in countries like the Gulf, as many prefer to settle in their home country after ten or fifteen years of working abroad.
Key Strategies to Achieve Financial Independence
To turn your dream of early retirement into reality, determination is essential. Here are three key strategies to guide you:
1) Maximize Your Earnings: Focus on advancing your career and increasing your income. This might involve acquiring new skills, seeking promotions, or exploring higher-paying job opportunities.
2) Live Moderately: Adopt a frugal lifestyle without compromising on essential needs. Living moderately doesn’t mean living miserably; it means making conscious spending decisions. For example, instead of buying a Rs 50,000 smartphone, opt for a Rs 10,000 one that meets your daily needs. This approach frees up a significant portion of your income for savings and investments.
3) Generate Additional Income: Look for opportunities to earn extra income outside your primary job. This could include freelancing, part-time work, or passive income streams like rental properties or investments.
Importance of Saving and Investing
A critical component of achieving financial independence is investing a substantial portion of your income — ideally between 50 to 70 percent. While this may seem daunting, adopting a moderate lifestyle can make it feasible. The key is to prioritize saving and investing over unnecessary expenditures. Investing wisely ensures that your savings grow over time, creating a reliable income stream for the future. This financial strategy is particularly beneficial for expatriates who aim to return to their home country with sufficient funds to sustain their desired lifestyle.
The Path to Financial Freedom
Biju’s journey exemplifies the transformative power of determination and strategic financial planning. By maximizing his earnings, living frugally, and investing diligently, he positioned himself to achieve financial freedom at an early age. His story serves as an inspiration for others who aspire to break free from traditional work norms and pursue a life of fulfilment and financial independence.
Achieving financial freedom early is a realistic and attainable goal with the right mindset and strategies. By embracing the principles of the FIRE movement, young individuals can redefine their approach to work and retirement, ultimately leading to a more balanced and fulfilling life.
The journey requires determination, discipline, and a commitment to making smart financial choices, but the rewards of financial independence and the ability to retire early are well worth the effort.
Views expressed are personal, and do not reflect the views of Mathrubhumi News. Share your feedback: antonycdavis@gmail.com
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