different types of fire financial independence

What FIRE Type Are You? 6 Different Types of Financial Independence

Picture this: you wake up and live your perfect day. Maybe it’s laying on a beach for 6 hours, then going out to dinner and ending the night dancing. Maybe it’s reading on your front porch, lunch with friends, some afternoon gardening, and then dinner at your Mom’s.

Then imagine that every day of your life is your perfect day. That’s what financial independence is.

Something I love about money is that you can use it as a tool to create the lifestyle that you want for yourself. Financial independence is when you have enough money in assets, like stocks, bonds, cash, or real estate, to pay all your bills.

Basically, it’s being rich enough to not need a day job.

But your financial independence might look very different from mine! That’s the cool thing about money; you can create what YOU want with it.

Let’s talk through the different types of FIRE, financial independence, and see which strategy makes sense for you.

One note: we will be talking about investment numbers needed to retire within the US, which is one of the most expensive countries to live in in the whole world. Your numbers will vary if you live outside the US!

Coast FIRE

Coast FIRE is when you have enough in your retirement accounts that without contributing anymore your investments will grow into enough to cover a traditional retirement at roughly age 65.

Once you have that nest egg amount, you only need to earn enough to cover your current expenses. So for example, if you were making $100,000 and saving 50% for retirement and then hit your Coast FIRE investment number, now you only need to earn $50,000 to cover your annual expenses. You no longer need to contribute to investments since compound interest will get you to your traditional retirement number.

You can read our post all about reaching Coast FIRE right here.

Lean FIRE

Lean FIRE is for all my budget babes who can live well on less. It’s broadly defined as having enough money in investments or passive income to live off of $30,000 annually.

Lean FIRE usually resonates with people who are naturally frugal, minimalistic, or have an anti-consumerist mindset. I myself resonate with Lean FIRE because I’m a natural saver, not spender. I get a lot of joy out of low cost experiences and don’t spend a lot of money.

You can read our more thorough breakdown of Lean FIRE here.

Chubby FIRE

Chubby FIRE is Goldie Locks of the financial independence movement. Not too little spending (like Lean FIRE) and not too much spending (like Fat FIRE), Chubby FIRE is just right for a lot of people!

Loosely defined as retiring with $2 million – $4 million in investments, and spending between $75,000 and $150,000 a year in retirement.

Chubby FIRE is popular among those who live in high cost of living areas and don’t want to leave them in retirement. It’s also commonly talked about in the chronic illness community among people who live with illnesses or conditions that have no cure. In the US, healthcare costs can easily reach six figures, so Chubby FIRE is seen as a path towards affording healthcare comfortably as you age.

I like the Chubby FIRE subreddit as a resource!

Fat FIRE

Fat FIRE is for those among us who love to spend and don’t want retirement to slow them down. People looking to reach Fat FIRE see themselves spending $200,000 or more a year in retirement and want to have an investment portfolio of $5 million or more before leaving work.

Obviously, Fat FIRE is a lot harder to reach for most people. Most people aiming for this level of financial independence are inheriting some kind of money or assets, have a high earning partner, and are high earning themselves.

DINK FIRE

What is that funny sounding word, DINK? It’s an acronym for Duel Income No Kids, which is a growing portion of adults around the globe. DINKs are couples where each person works and they do not plan to have kids.

DINK FIRE is a new branch of the financial independence movement. For dual income households without the expense of children financial independence can look however they want! Usually people interested in this are also interested in a somewhat mobile lifestyle or taking career risks like starting their own business.

There is no existing retirement number for DINK FIRE, so allow me to put one on the map. I think DINK couples in the US should aim for $2 million invested to be considered financially independent.

Barista FIRE

We’ve talked about Barista FIRE before, so check out our full guide here. Barista FIRE is defined as saving and investing enough that the compound interest will cover your intended retirement date and/or cover most of your current living expenses.

This then allows you to work part-time to cover your basic living expenses until you hit retirement age and begin to withdraw money from your investments.

Barista FIRE is popular because it’s a stage of financial independence most people can reach well before traditional FIRE. It helps people establish financially security and gives them the option to go from full time work to part time work, or lower paying passion work.

How to Reach The Different Types of Financial Independence

No matter which flavor of FIRE appeals to you, you will have to have a financial plan to reach it!

The formula is simple: increase your income, reduce your expenses, and save or invest the difference.

What makes it hard is being consistent over time and dealing with the surprises that life throws at you!

I recommend everyone start on their path towards financial independence by sitting down and reviewing their income and their expenses. You can use a free budgeting app like Empower to pull all your financial information from your bank, credit cards, student loan lenders, even your mortgage lender.

Once you have the information all laid out you can look for patterns. Do you find yourself at Target twice a week spending $200 each time? That would be a good area to cut back in and to redirect some of that money towards investing!

Next, you’ll want to pay off high interest debt. I define high interest debt as anything with an interest rate above 4%. Focus on paying off your highest interest debt first to save the most money (by paying the least amount of interest!) Read our best debt payoff tips here.

Finally, to reach any of the different types of fire financial independence we’ve talked about today you’ll need to invest! Investing in the stock market is a proven way to build wealth. It’s what made Warren Buffet and Jeff Bezos so ridiculously wealth.

We have guide to sustainable investing right here, because you know we don’t like to put our money into terrible companies.

The different types of FIRE financial independence mean that there are a LOT of options for your own path to financial independence! You don’t have to do what a blogger or social media personality does to reach FIRE.

Which one of these different types of fire financial independence resonates the most with you? Let me know in the comments!

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