My Reflections on FIRE in 2020

I was asked recently about my current thoughts on the financial independence, retire early (FIRE) movement, and how I’m currently progressing along with my own journey. As someone who likes to keep track of their thoughts by writing them down, I’ve jotted down some of my current reflections below and look forward to revisiting them yearly to see what changes and what stays the same.

Have your early retirement plans changed over the last few years?

The last two years have given me a much greater perspective on my goals; I'm still working towards FIRE, but, the goal is now part of the "furniture" rather than something I think about daily. When I set my financial goals each year, FIRE is a guiding framework but it's no longer the only financial goal I have. My mindset towards consumption has definitely changed for the better, although I still struggle with buying books! 

Some people have increased the amount of money they would like to have in retirement recently - have you done this?

In all honesty, I have no idea how much I'll eventually need, we all just need to take an educated guess at it. Having a number in mind makes the goal-setting much easier, and at least it makes sure you're moving towards your goalpost - whatever that may be. We can always spend more money, but working out when we've got enough is the hard part. My FIRE number will probably change a dozen more times before I even get there, and with everything going on at the moment, it certainly reinforces that fact that you never know what tomorrow may hold. I want to be financially secure and I'll keep adjusting that plan for whatever life throws at me. 

What have the last two years been like for you? Any breakthroughs and discoveries about your approach to spending and savings?

The last few years have been mostly focused on investing in my education, both through tertiary education and increasing my skills at work. As a young person increasing your skills and abilities can be the best investment you make, as it helps you to increase the gap between what you earn and what you spend. I've set myself financial goals at the start of each year with my FIRE goal in mind and have been fairly consistent with reaching them. 

The best thing I've done is automate my finances, so I'm not manually making the transfers into my accounts each month. Apart from compound interest, I think automation is your greatest secret weapon when it comes to your finances. If you can't automate something, then schedule a monthly recurring calendar event to remind you. My investment approach has remained fairly consistent (diversified portfolio of ETFs) and I have been learning about the basics of researching Australian shares - there's a lot to it! 

Keeping your investment plan simple certainly helps - the more complex your approach the more actively you need to monitor it. Focus on dollar-cost averaging into the market rather than trying to pick the top and bottom. I've also focused a lot more on keeping my investment fees low, now that I know the impact over my lifetime - check out the MoneySmart Fee Calculator.

What lessons have you learnt on the path to financial independence? 

• Don't let your FIRE goals overtake your life, they should stay in the back of your mind but make sure you don't lose sight of what's happening in your life right now.

• Don't invest your emergency fund - pertinent at the moment. As a long-term investor, you don't want to be selling your ETFs/shares at rock bottom prices.

• Remember to take care of your super!

• Automate your financial life and take some friction away from achieving your goals.

• Investing in yourself is just as important - this will ensure you can move to higher-paid work/work you enjoy more.

• FIRE isn't a race. Taking a measured path to reach your goals is a sensible approach. Maybe part-time work, casual work or starting a side hustle are the way to go, instead of sprinting to the finish line.

• Never neglect your health - what's the point of reaching your FIRE goals if you're not able to enjoy it.

• Invest your time in the relationships with your family and friends

We are always looking for insightful ways to live financially, mindfully and keeping costs low. What do you say about this? 

I love Ramit Sethi's approach to this - he talks about viewing your spending based on your money dials. What are the things in your life that bring you joy to spend money on? Are they convenience, travel, health, experience, freedom, relationships, generosity, luxury, social status, self-improvement? Arrange your finances to maximise your spending where it brings you the most happiness and cut your spending in the other areas of your life. Cutting all expenses to bare bones and removing any discretionary spending is not an approach that works for me - it's all about balance and finding the approach that works for you. Your FIRE goals shouldn't be making you miserable and if they are, it might be time to take a step back and work out a better plan. 

What has amazed you about your FIRE journey? 

I honestly thought it would be a phase like most things, however, it's starting to become part of my personal framework. My mindset towards money has also shifted towards viewing it as a tool, neither good nor bad, but a tool that can be used to your benefit with training and practice. It's also encouraged me to always keep learning and investing time in my relationships with my family and friends. I'm glad that it’s starting to open up more conversations with people around the world about taking control of their finances and setting financial goals.

What blogs, websites, books are continuing to inspire you? 

Top 8 Books (because there are so many)!

• The Behavioural Investor - Daniel Crosby

• Money School - Lacey Filipich

• I Will Teach You To Be Rich - Ramit Sethi

• Happy Money - Ken Honda

• Smashed Avocado - Nicole Haddow

• Side Hustle - Chris Guillebeau

• Millennial Money - Patrick O'Shaughnessy

• The Simple Path to Wealth - JL Collins

Favourite Websites

• Rask Australia — personal finance and investment hub

• Miss Money Box — a strong focus on financial education

• Ladies Finance Club — female-focused personal finance community and events

• Aussie Firebug — Australian financial independence content

• Livewire — free investment insights from leading financial professionals

• InvestSMART — a source of free educational articles by professional share analysts

• AFR — digital and hard copy magazine covering Australian financial news (paywall)

• SkilledSmart — courses on money, wealth & personal finance for Australian adults

• Four Pillar Freedom – insights on how to grow wealth and gain freedom

• Collaborative Fund – thought provoking articles written by the talented Morgan Housel

• Minafi – interactive content on reaching financial independence through investing, minimalism and mindfulness

Financial independence isn’t something that’s going to happen overnight, so it’s important to be patient and check in with your goals on a regular basis.

Kate