5 March 2016 –

So what does FIRE’d mean?

FIRE is a term that refers to Financial Independence and Retiring Early. While both financial independence and early retirement have a lot of commonalities, they are not exactly the same.  

So what is the difference between financial independence and early retirement?

Most people think of retirement as a bunch of old people sitting around an old folks home waiting for the end.

But my preferred definition of retirement is that it is reaching the point in your life when you finish full-time work, whether it’s 30, 40, or 75.

In fact many people finish their full-time career and then continue working for many years afterwards either part-time or getting much satisfaction from doing volunteer work.

The key point is, that you can focus on doing whatever you chose to do each and every day without being reliant on that regular pay cheque.

Financial independence, however, is that the glorious day when you finally realise that you no longer have to go to work for the money.

Essentially, the money you have invested and saved provides you enough of a passive income that you no longer rely on a traditional work-based income anymore. That’s the day you can choose to give up work if you want to.

The key to this is……it’s not how much you earn, but how much you save.

I’ll show you how simple this can be done. It may seem a little daunting at first but you can do it. It just takes time and effort but take it from someone who’s done it, it’s a goal well worth reaching.

2 thoughts on “Financial independence versus early retirement”

  1. Great post. I am early on in my working life, but I already see that I do not want to spend the next 30-40 years working, especially at a job I hate. It consumes so much energy between the daily commute (3-3.5 hours) and the work day (9 hours), that by the time I get home to my family, I’m drained. I am trying to live as frugally as possibly, so maybe I can have some sort of early retirement and not spend a majority of my life dreading the hours of 6 am-6 pm. Thanks for your great post!

    1. Hi there Piggbanknomics and thanks for dropping by. Yeah, I reckon get that 30 to 40 year hard slog out of your head as early as possible and start getting smart about how to reduce it by as many years as you possibly can. And if you hate what you’re doing, find something you do want to do. By the sounds of it, you’re young enough to retrain for a different career if that’s what it takes. I ended up spending far too long in jobs I hated and it just grinds away at your soul a little bit more every day. As for 3.5 hour daily commutes…..WTF!! Hey, thanks for your comment and I hope we see you back here on a regular basis.

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