The FIRE Movement, Summed Up in 9 Words

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(This article was originally published in NextIdea, our weekly newsletter about side hustles and the pursuit of financial independence. Sign up for this using the field below.)

Our financial independence here at NextAdvisor can be summed up in nine words: cut your expenses, make more money, invest the difference.

The Financial Independence, Retire Early (FIRE) movement inspires many personal finance enthusiasts, but it can also quickly turn into a numbers tornado. To help you master the basics, we have a new guide to check out and bookmark. Send this to your loved ones who will look at you like you’re out of control when you start talking about FIRE.

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What is Financial Independence, Early Retirement? A Beginner’s Guide

Here’s a little more detail about the three strategies we’ll cover.

#1: Reduce your spending

I know, I know – that’s the not-so-fun category. But we know that the insidious lifestyle can sabotage many personal financial goals, and spending tends to increase as income rises as well. Financial bloggers lost their minds earlier this year when a report by PYMNTS.com and LendingClub revealed that one in three consumers making $250,000 a year is still living paycheck to paycheck. For many of us, money carries a unique emotional charge and inspires beliefs that may or may not be true.

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More money isn’t always the answer when it leads to more spending. See where your money is going each month and see if you can cut some costs and keep more money in your pocket.

#2: Make more money

This is my personal favorite category. Whether it’s through side hustles, a small business, a new passive income stream, or a salary negotiation, many of us need to start making more money each month to properly pursue our FIRE ambitions.

Some approaches are more time-consuming than others, but there’s something for everyone.

#3: Invest the difference

As you widen the gap between income and expenses, you should make sure your excess is invested. At NextAdvisor, we recommend investing in index funds as a ‘set it and forget it’ approach, but you may have your own investment strategies and certain investments will become more or less attractive as the economy ebbs and flows.

It is currently a very attractive investment opportunity Series I Savings Bonds I-Bonds are “inflation proof” because their yields are designed to outperform inflation; Since inflation is high, the ROI is also high. I asked a personal finance expert Rita Soledad Fernández Paulino about different scenarios where someone might want to invest in a low-risk, safe-haven asset like an I-Bond. Read more about these scenarios here:

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I-Bonds have the best yields ever, but that’s about to change. You should know what this money expert says

I-Bonds currently yield 9.62%, but there are certain requirements and downsides you should be aware of before taking the plunge.

If you have time later today, Fernández Paulino and I will be hosting a free webinar on I-Bonds together at 4:00 PM PT (7:00 PM ET). Register here or click on the image below to grab one of the last remaining spots.

Financial independence is a long game. Take small steps towards your money goals this week and you will begin to generate the momentum you need to break through.

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