How far have women in America come to gaining financial independence? Let's look at the history of where women started and how far we've come.
F.I.R.E. – Financially Independent, Retire Early
The Great Resignation, quiet quitting, leaving the workforce earlier than planned, or career switching – these are all workplace movements that have seemed more prevalent over the last two years, or at least more acknowledged. Workers are re-evaluating their mental health, values, what’s important to them and what they want to do with their time.
Are you wanting something more from life than the 8am – 5pm work grind? Whether it’s sleeping in on Monday, taking a month to travel, or doing work that feeds your heart more than your wallet, having the ability to choose what you do and when you do it is a luxury many people can only dream about. But it may be more attainable than it first appears, if you’re willing to make a few tradeoffs and stick to a plan.
The FIRE movement (financial independence, retire early) preaches the value of aggressive saving and prudent investing. This concept was first introduced in the 1992 best-selling book Your Money or Your Life by Vicki Robin and Joe Dominguez. Many people who adhere to FIRE principals don’t even “plan” to retire early – they want the ability to make choices without being tethered to a traditional day job. This motivation appears to only have grown stronger during and after covid for many professionals. So while retirement may not be the plan, they still have a plan!
5 Tips & Tricks from FIRE Supersavers
- Take advantage of workplace benefits.
A lot of people don’t understand or know about all the benefits they might have access to through their employer. If you have benefits available, it’s important to really understand what you’re offered in order to maximize them.
For instance, even if you’re enrolled automatically in your employer’s workplace savings plan (like a 401k or 403b), it may be at a contribution level that misses part of the match from your employer, which is basically free money. To get the entire match, you may need to take action and increase your contribution. It’s also imperative that you choose the investments within that savings plan that will help grow your money for your needs.
Another example of a benefit your employer may offer is an ESPP (Employee Stock Purchase Plan). These can be very helpful to save and grow your money through an automated process. If you’re not participating in this plan but have access to one, do some more research to see if it’s right for you.
- Make a detailed budget.
You have to be detailed, you can’t be wishy washy—you are not going to magically grow more money to cover expenses outside your budget. An example of a FIRE supersaver budget allocates $200 a month to “fun money”, that’s just $50 a week. Most FIRE supersavers set aside 70% of their income towards savings and investments. To ensure you stick to this goal, everything is allocated to something else.
- Set goals.
Having a goal in mind helps you stick with it. Whether it’s a lofty dream for your future life or saving a specific amount of money, keeping your vision for the future in mind can help you through periods of lagging motivation. Make a vision board or post pictures on your fridge or walls if you need a visual of your goals.
- Avoid lifestyle creep.
It’s easy to fall into this trap. When you used to make a quarter of what you earn now, you were probably fine and life was comfortable enough. But that bar seems to go up as your income does. It’s something you should try to be conscious of—when is it enough?
You can have your employer direct your paycheck into as many accounts as you want. To ensure you stick to that savings plan, direct part of your paycheck directly to that high-yield savings account you’re stocking up and send another part of your paycheck to an investment account that you’re growing. Only send what’s needed for your budget to a checking account where you have easy access to it. By automating savings, there is no temptation to go off course.
Whether your 30 or 50 years old and wanting more flexibility in your life, to do what you enjoy – working on your own terms, or retiring – all these tips and tricks can help you achieve that goal. We can help you build your plan and stick with it. Everyone needs an accountability partner when achieving challenging goals.
M & A Consulting Group, LLC, doing business as CAM Investor Solutions is an SEC registered investment adviser. As a fee-only firm, we do not receive commissions nor sell any insurance products. We provide financial planning and investment information that we believe to be useful and accurate. However, there cannot be any guarantees. This blog has been provided solely for informational purposes and does not represent investment advice or provide an opinion regarding fairness of any transaction. It does not constitute an offer, solicitation or a recommendation to buy or sell any particular security or instrument or to adopt any investment strategy. Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss. Tax planning and investment illustrations are provided for educational purposes and should not be considered tax advice or recommendations. Investors should seek additional advice from their financial advisor or tax professional.