How To Use the FIRE Method in 6 Steps (With Benefits)

By Indeed Editorial Team

Published October 7, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

There are various financial plans that people can employ to achieve goals with their money. This can include working toward securing financial independence to ensure a more comfortable lifestyle. Financial freedom can have various objectives depending on a person's goals, but for some, it can include retiring early, which is the ultimate goal of the FIRE method.

In this article, we define the FIRE method and the steps you can take to integrate it into your financial future.

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What is the FIRE method?

Financial Independence, Retire Early (FIRE) entails financial goals that detail a strict monetary program with the final goal of retiring at an earlier age. This can vary depending on a person's plans but usually involves changing financial variables such as income, spending habits, savings and investments. FIRE's primary goal is to encourage creating a plan to achieve financial independence as early as possible.

Related: Ideas for "What To Do When I Retire"

What is financial independence?

Financial independence is the concept of accruing enough wealth to live comfortably without the need to work. This can include a plan to cover your living expenses and eliminate the need to work to support your lifestyle. Another method is achieving enough financial support through savings to reduce the amount of work to a more preferred level. The main goal is to completely disconnect your personal finances from your paycheck to achieve a self-sufficient lifestyle.

What are some benefits of FIRE?

Here are some benefits that might result from using the FIRE method effectively:

  • Considering your future: The FIRE method can encourage you to think more about your future and how you can achieve your desired outcomes. This can include detailing a plan that can affect your future retirement.

  • Analyzing your monetary situation: The FIRE method can encourage you to think more about your money and its well-being state. This can include highlighting how much income and savings you have.

  • Changing your habits: The FIRE method can encourage you to think more about your various financial habits and recognize what you might need to change. This can include focusing on your spending and saving habits.

  • Emphasizing the need for self-discipline: The FIRE method can also encourage you to think about your level of self-discipline. Various aspects of the FIRE method can include adapting to a more strict and frugal mindset.

What are the different variants of FIRE?

Several variants of the FIRE method focus on different aspects of financial habits and how they affect the end goal of early retirement. Here's a list of five FIRE method variants, including the aspects of investing each affects:


LeanFIRE encourages a rigorous approach that encourages minimalist living and higher levels of saving. People who use this method create a strict plan that encourages them to live on nearly the bare minimum required to live at a moderately comfortable level and save the rest of their funds. This can lead to a modest living to achieve early retirement as soon as possible.


FatFIRE encourages a slightly less frugal approach that encourages a more indulgent lifestyle. This method focuses on increasing your income so you can continue saving without resorting to a more modest lifestyle. It's a plan that focuses on more aggressive savings to compensate for the possible increase in spending.


BaristaFIRE is a method that focuses on a slightly different retirement method, as someone using this method may seek only to eliminate full-time work after they retire. They can choose to gain financial independence through their savings, which they also bolster through part-time work, freelance work or a dream career that doesn't offer as much income as their pre-retirement career.


CoastFIRE is a method that focuses on investing as much of your funds as possible. People who use this method plan allow their investments to gain interest and spend as much time on the market as possible. The end goal is to achieve financial independence through capital gains and dividends.

How to use the FIRE method

Here are some steps you can take to integrate the FIRE method into your lifestyle:

1. Make a plan

The first step to integrating the FIRE method into your financial habits is creating a clear financial plan. Consider calculating the amount of wealth you might require for the level of future financial independence you prefer. This can include writing a list of specific goals for your spending, savings and investments. You can also use this time to determine which version of FIRE you'd prefer to follow.

2. Reduce your spending

Each method of FIRE suggests reducing your overall spending. You can create a budget for monthly spending by closely tracking your common expenses. This can offer insight into what parts of your spending may require reduction or elimination. Depending on which variant of FIRE you prefer, you can choose at this point to change or maintain your current lifestyle.

Related: 15 Effective Budgeting Tips Everyone Should Know

3. Aim to reduce debt

Creating a plan using the FIRE method can include reducing or eliminating your current debt. A prioritized recommendation is entirely paying off any credit card and loan debts you possess as soon as possible. Another method you can use is creating an emergency savings fund that can help you navigate financial troubles and avoid the need for credit in the future.

4. Increase the amount you save

Your financial plan can include savings goals that determine how much you plan to save each month. This can start as a smaller goal and gradually increase with time to make you more comfortable with an effective savings process. Tracking your savings can also result in continued motivation, further encouraging more saving.

5. Increase your income

People using FIRE can look for ways to boost their income to increase the wealth they can save and invest. Additional income can come from side jobs like dog-walking, blogging or other freelance work. Focusing on side work that you're passionate about can also provide you with income methods that you can continue even after achieving some financial freedom. You can then use these methods to create disposable income, resulting in a more comfortable living situation.

Related: 20 Side Jobs To Make Extra Money

6. Invest your savings

Investments can help you generate passive income that contributes to your retirement savings. This can include investing in stocks, real estate or high-yield savings accounts. You can also consult a financial adviser to obtain the information you need to better understand your investment options and their potential returns.

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