It is great to know your FIRE number but important to know what to do with it and decide how you choose to get there. There’s a lot of emotions involved in working towards FIRE but the basics remain the same. It starts with knowing what you spend on and how much is your monthly living cost. The second critical part is the income you generate monthly and this is income from all sources available to you. If monthly income generated is higher than monthly living cost, awesome as you’re already on your way to FIRE without knowing it. If your monthly income is less than your monthly living cost, then your priority is different. The first target is to not spend more than your income and then gradually create a gap between your income and what you spend.

Even though I’m not at FIRE, below are the steps I followed to be on the way there:

Know what you spend on – There needs to be some comfort in creating a budget and tracking actual spend vs. budget. It is natural for the brain to discount our actual spend as this is a protection mechanism for humans. Realising you have overspent is an uncomfortable feeling that could result in anxiety so our brain discounts it to protect the body. I am still sometimes shocked when I track my spending and the total is staring right at me.

Regularly review what you spend on – I group my spending into what is needed and nice to have. What is needed (mainly food, shelter, health) are the most important and nice to haves are everything else I can do without. When I started my FIRE journey, I had a long list of nice to haves and they quickly got trimmed. I reduced my annual phone bill from €300 to €100 and I cancelled all my streaming subscriptions (Disney+ and Netflix). I stopped my high uber use, reduced expensive to me eating out and packed my lunch to work. The actions I took expanded the gap between my income and living cost and this enabled me to funnel this into investments.

Increase your income – It’s easy to know your net pay as this is what gets deposited into the bank account on a biweekly or monthly basis. To accelerate the journey to FIRE, increasing income is always great as well as reducing cost. Use every opportunity available to increase income from asking for a salary increase to switching jobs. Other ways are selling things you no longer need and making additional money from research study and doing surveys. Every additional income I make goes into my investment and this has contributed to my networth growth. I am always on the lookout for new ways to make money and I get to find them because I’m on the lookout.

Invest your money – The best return on my savings has come from investing it in the stock market. In recent years, there are now high yield savings accounts with over 4% of interest. The high interest rates still don’t come.close to the return I got on my ETFs for the same period. I acknowledge investing in the stock market is scary and it’s easy to lose money which happened to me with my individual stocks investment. To diversify and reduce this loss risk, a broad based ETF became my go to option and this is where I now invest 100%. I still get distracted by the stock of the moment and sometimes consider switching strategy but I quickly remind myself I’ve never won at that and to remain focused.

Working towards FIRE is not a sprint. It’s a marathon and it’s important to personally define the pace that works. I was initially sprinting towards it and I have now slowed it down to a pace that works for me. I may go fast again if I’m up to it but until then I continue to live life and enjoy my daily life sparks.

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