Reflecting on the psychological aspect of FIRE

From a young age, I’ve been heavily influenced by my dad, an entrepreneurial small business accountant who operates primarily as a ‘one-man band’. I’ve always admired how he supports his clients through specialised tax advice and builds strong, long-lasting relationships that seem to last a lifetime.

Naturally, I developed a keen interest in business, finance and investing which began in my late teens and developed throughout my twenties. This inevitably brought down the path of FIRE (Financial Independence Retire Early) which would change my life forever, but not entirely for the better, as I’ll further unpack.

While the FIRE movement is tremendously liberating, it’s also fair to say the downsides are not frequently discussed within the community, especially for those early on their FI journey (it is, however, touched on by those who’ve already reached FI).

I want to preface by mentioning I’m a huge advocate of the FIRE movement. It has enriched my life, as well as countless others. Philosophically, I also understand the FIRE movement represents much more than just saving and investing as much as possible to retire early; it’s about using money as a vehicle to live the life you truly want. In its purest form, there are few people that would be worse off by following the movement.

 Without further ado, here are the aspects of FIRE I wish I knew before I started my journey, and I hope they bring you some value.  

FIRE can improve your future, but it can also damage your present

Once you learn about FIRE, for better or worse, there’s no way to unlearn it. For many of us within the community, including myself, this represents a challenge to live in the moment and avoid endlessly optimising for the future.

With too much future bias, and without the correct disciplines in place, it’s easy to stop enjoying things for how they are and always be dissatisfied with your current situation. A major challenge is the harder you push for extreme outcomes such as FIRE, the more you need to sacrifice and/or rely on good fortune (or lack of bad fortune) to reach your ambitious targets. Without a concerted and conscious effort, you can find yourself spending less time on hobbies, developing relationships, or focusing on other things that bring you fulfilment and joy. If you work in extremes or exhibit an “all or nothing” personality, I would argue this can bring you further from FI than a more balanced approach.

Further, today’s sacrifices aren’t always clear and obvious; it often takes a significant amount of time for the outcomes to actualise. Some aspects, such as our built-up sense of identity, are not truly understood until much later (if at all). For instance, how many of us identify as “frugal”, “responsible”, or “disciplined” with money? And how do we let this impact our everyday enjoyment (or even take pride in our potentially unhealthy inclination to delayed gratification!!)?

FIRE promises freedom, but the pursuit can feel like a trap

While chasing financial freedom, we’re often seduced by the idea of doing whatever we want, having control over our lives, and exhibiting absolute certainty over our financial situation through forecasts and projections, none more so than the 4% rule. While FIRE does help you achieve financial freedom, it won’t necessarily give you the peace of mind you’re searching for. During my lifetime, I’ve felt as trapped chasing FIRE as I have participating in the typical “rat race”. In a lot of ways, I wonder if we’d have more mental peace if we never considered the possibility of retiring early.

The FIRE movement is energising in the sense it reduces money stress, and more importantly, gives a greater sense of control and autonomy over a person’s life. After all, better financial literacy and encouragement to live below your means can only be a good thing, right? The challenge is balancing our desire to reach an extreme outcome with healthy habits and not losing ourselves in the process. If you could go back in time and talk to your 18-year-old self, would your first piece of advice be related to finances?

It’s ok to not progress as quickly as you possibly can

While our community is made of a diverse range of people, we’re still very much on the fringes of society. The FIRE movement has only recently gained traction in mainstream media and it’s still relatively unknown amongst the wider population. Due to the extreme nature of FIRE, especially those aspiring to retire very young (as opposed to those trying to shave off 5-10 years of work), it attracts people with select personality traits and characteristics. As whole, we are exceedingly dedicated, disciplined and hard-working individuals that are often goal-oriented and focused. This is likely what draws us to the movement in the first place.

These traits help enormously while chasing down big targets, however they can just as easily become roadblocks if not understood or managed correctly. One aspect of FIRE I wish I knew earlier was that it’s ok to progress slower than you would’ve hoped (or even take a step backwards); it’s also certainly not a reflection of your ability or your self-worth. Knowing this earlier on your journey may help you stay the course or continue on when things get tough.

So… would I better off I never knew about FIRE?

There have been some unintended downsides of FIRE that I wish I was better prepared for, and I hope this article has brought you some value or given you something new to think about. If I had my time again, I wouldn’t put so much pressure on myself and let ambitious goals become tied to my sense of identity. With hindsight, I’d put the right checks in place to make sure I enjoy the present moment at least as much as I prepare for the future, and to not wish away my time. As a (relatively) young man, it’s something I’ll continue to work on while still progressing to FI.

On balance, though, I believe the FIRE movement has had an overall positive impact on my life. I’m certainly in a better financial position compared to if I never learnt about FIRE. Moreover, I’ve thoroughly enjoyed learning about personal finance, investing, and other topics related to FIRE. I’ve also drawn a lot of inspiration from the leaders in our community that have made me want to dream bigger.