If you have been an active reader on personal finance topics, you must have heard of the FIRE movement. FIRE is an abbreviate for 'Financially Independent Retiring Early'. The movement is slowly gaining popularity among many young executives and professionals around the globe. In this piece, we talk about the thought process behind the FIRE movement and the things that one should be careful about.

Why FIRE?
Most of the executives today have been working hard in tough competition and are in the so-called 'rat's race'. The pay is not bad and most executives are earning well and maintaining a good standard of living. However, most of the executives feel a greater need for personal freedom and balance in life. This is the starting point towards FIRE. In brief, the following reasons can be cited which supports the FIRE movement.

• Good pay from at the start of the career > potential for higher savings
• Married couples having double income
• The uncertainty of the present job profiles in the long-term,
• increased work pressure and internal politics
• Greater opportunities for freelancing
• Rise and maturing of the start-up culture
• Longing for professional independence
• Social acceptance for new work culture /life choices

What does FIRE really mean?
Contrary to what one may perceive, FIRE is not retirement. It is about having the freedom to engage in work of your choice and at your terms. Most FIRE families have to work for money. They are not rich but have enough resources to live a modest life. However, the difference being that the money is not as critical as it was earlier. The families living the FIRE life may have some tough choices to make in their lives. They normally make big cut downs on discretionary expenses and live a modest life.

Steps to FIRE

• Make appropriate plans for pre and post FIRE life
• Work hard for last few years and save as much as possible
• Cut down on all unnecessary and discretionary expenses
• Cut down and eliminate all outstanding debt
• Settle down with your own house (optional)
• Build skills and knowledge required for life post FIRE
• Decide on the appropriate time and resources to make the jump

So when is the perceived right time for FIRE? Apparently, it is when you have adequate net savings to sustain you for at least a decent foreseeable future. This FIRE kitty should be adequate enough to generate enough earnings or cash flow to meet your essential life needs.

Most of the above habits and behaviour related to saving and expenses continues after FIRE. However, the difference now is that the regular pay-cheque is replaced by inconsistent cash flows. Some people may slowly end up doing great on freelancing side, early adequate income so that their FIRE kitty is not exhausted but instead gets getting bigger.

Risks to FIRE:
There are many professionals in India who today start thinking of taking a break from work and/or starting their own business. Ideally, 40 or even 35 years is the new target age for such professionals for building some kitty to start on their own. While it all sounds great and nice, here are a few things that deserve considerable rethinking...

• You / your family has to survive at least the next 30-40 years without regular income!
• There are huge uncertainties on health/medical front which can wipe out your kitty.
• There are personal sacrifices you may need to make for things like personal holidays, cars, demands of your children, entertainment expenses and so on.
• Family support and understanding is crucial for a happy life after FIRE.
• Freelancing and running own business successfully is not going to be easy and will take lots of hard work.

However, everything boils down to what you desire from life and how well you plan ahead. Nothing is impossible and today not everything is measured in monetary terms, though it still remains as important as ever. If you or your children are serious of FIRE, we would suggest that you talk to your advisor first and make a thorough plan.