FIRE (No) Secret for Those Who Need Financial Freedom

If asked, when will you want to retire? Everyone will answer “as soonest as possible”. Anyway, you need “Financial freedom” to fulfill your retirement life. The concept of financial freedom is a goal of the new generation which is called FIRE (Financial Independence Retire Early).

Those people will set conditions to reach financial freedom goal as fast as they can that is to manage expenses in line with their living and take the rest of the money to invest. They set investment goals and plan to achieve it within 10 years or 20 years, etc. The tips to be successful FIRE are as follows:

1.Set a spending plan

Tracking your financial status with details, for example, continually record your income and expenses on a weekly or monthly basis, and divide your expenses into 3 categories:

Fixed expense:
Regularly monthly expenses such as house and car installment, or loan, etc.

Variable expense:
Non-fixed monthly expenses depending on lifestyles such as food, water, and electricity bills, traveling, shopping, dining out, party, medical fee, etc.

Savings and investment
: Regular monthly expenses for savings and investment according to your goal such as house down payment, wedding, retirement investment, etc.   

The new generation will cut off unnecessary expenses such as variable and non-essential expenses like shopping, dining out, and parties.

They try not to create debt by considering the debt-to-income ratio as a base; the debt-to-income ratio no exceeds 35%. For example, Monthly income 20,000 baht, and debt shouldn’t exceed 7,000 baht per month.

2.Find extra income

Apart from cutting off unnecessary expenses, it’s better to look for extra income by using your skill to create a new career, and then start investing with your extra money in order to achieve financial freedom as soonest as you can.

Referring to the data of The Stock Exchange of Thailand, there are 4 groups of people who are the most successful FIRE.

1.Know how to find:
This group knows how to use their ability to make money. When they earn a higher income, they have more savings and more investment accordingly.

2.Know how to save:
This group has the financial discipline and knows how to allocate their income to invest continually. Their investment base has expanded in order to build wealth in the future.

3.Know how to spend:
This group spends money on the essentials of living and reduces luxurious expenses so the remaining income will be enough to invest for financial stability in the future.

4.Know how to grow profit:
This group believes in investment and knows variety of investment alternatives to grow profit at the level of acceptable risk. They start investing at a young age to gain more opportunity for seeking financial freedom.

Financial freedom is everyone’s goal and it needs financial discipline to reach the target. Starting by making money and managing your expenses, and then taking your income to invest for sustainable profit. Investing from an early age speed up your financial freedom achievement.