There’s a new trend picking up steam among young people, and for once, it’s a good one. It’s an obsession with saving money. Young people started realizing that they won’t be able to rely on Social Security, pensions or benefits that Baby Boomers currently have access to. With articles like this one from The Atlantic describing the phenomenon of delayed & ultimately cancelled retirements falling on those now in their 60s, millennials are taking that as a clear warning to act now and save for retirement.
However, an over-achieving subsect of millennials are taking this warning to a new level and attempting to save enough to enable early retirement. Typically as early as 35 or 40 years old. Even young celebrities and personalities have adopted the FIRE lifestyle, which stands for Financial Independence, Retire Early. An example is NFL player Brandon Copeland:
While Copeland is the first to admit he doesn’t specialize in financial literacy — “the first day of the class I’m going to tell the class that I am not an expert in all of this stuff, and no one is an expert in all of this stuff,” he told the Wall Street Journal — he’s careful with his cash.CNBC.com, NFL player who saves nearly 90% of his income teaches a money class at Penn called ‘Life 101’
“I’ve literally hoarded money,” he told ESPN in 2017. “I’m literally stacking, stacking, stacking.”
Nearly 60 percent of Copeland’s post-tax salary goes towards “safe, long-term” investments, he explained. Another 30 percent goes towards savings. He lives off the remaining 10-15 percent.
That’s 90% of his income dedicated to savings/investments! And while most people can’t do that, FIRE adopters simply aim to go beyond the general 50/30/20 rule where at least 20% of your income goes towards savings; FIRE enthusiasts often aim as high as 50% savings rate.
Interested in getting started?
Figure out how much you can afford to save & jump on the bandwagon. In other words, if you saved every penny outside of your core expenses (rent, auto, groceries, utilities etc), how much would you have left? Where can you afford to down-size? (Pro-tip, usually the highest impact here would be decreasing the cost of your rent.)
You can also Contact Us if you’d like a consultation or help understanding how to better manage your finances so you can save more (and hopefully retire early).