Authored by Valentina Wilson
Most of us dream of spending our lives exploring. But the main question is, how can you quench your thirst for exploring new places when traveling is an expensive hobby, and you need money for it.
The good news is that you don’t have to be rich, and if you follow the FIRE (Financial Independence, Retire Early) movement diligently, it can help you save enough money to fulfill your travel dreams.
Can You Successfully use the FIRE Movement to Fulfill Your Traveling Dreams?
What is FIRE?
The full form of FIRE is the Financial Independence and Retire Early Movement. It’s is all about saving and investing money aggressively so that you can be financially independent and can retire from your 9-5 jobs in your 30s or 40s.
The movement is all about saving 50% to 75% of the amount you need to lead a comfortable life and travel extensively without working.
This means you can follow your passions, explore your hobbies, and travel the world without having to do a job. You will get enough time and space to explore new hobbies, careers, and travel opportunities.
FIRE is all about retiring at the age of 30 or 40 years to fulfill your deepest desires. And when your deepest desire is to explore the world without thinking about money or anything, then you have to be serious about the FIRE movement.
You have to take steps to make your dream of becoming financially independent sooner rather than later. Here are a few steps that you need to take to walk toward your dreams.
1. List the Things You Want to do in Retirement
What do you want to accomplish after retirement? Create a list of the things that bring a smile to your face. For example, if you want to travel the whole world, then it should be at the top of the list.
Next, you can list the other things that you want to do after retirement. You have full freedom to include anything you want in the list. The list must reflect what is there in your heart.
Once you have created the list, calculate how much money you need to fulfill your desires. Be realistic and quote the actual figure since a lot will depend on it.
2. Evaluate Your Income and Expenses
The list is all about your deepest desires. But what about your present circumstances? How many dollars do you earn now? What are your expenses?
When you are calculating your income, make sure you include all the available sources. This includes your paycheck, stock dividends, interest from bonds, rents, etc.
There is no need to panic if you have only one source of income. You have to start your journey somewhere. If you have a single source of income, then it’s time to think about creating multiple streams of income, which we will discuss in the next point.
After you have calculated your monthly income, you need to get an idea of your expenses. Add your necessary and discretionary expenses to get the total figure. This will help you to know how much you are saving every month.
Suppose your income is $4000 and your expenses are $3500. So, you are saving $500 every month. That means you are saving $6000 annually. Is it enough to retire at 40 and fulfill your traveling dreams? If not, then you need to reduce your expenses and boost savings.
Reducing Your Expenses
At this point, most people need to look for ways to reduce your expenses and save money. The holiday shopping season is approaching soon. People spend a fortune during the holidays. But you cannot do that.
Though you may start by looking for ways to save money during the holidays, your job doesn’t end there. You have to save money on the house, food, transportation, utility bills, insurance premiums, home loans, debts, etc.
If any expense is acting as an obstacle to your dream of traveling the world after retiring early, then you should eliminate it. Adopt a frugal lifestyle to save money in all areas of your life.
You will be surprised to see how much you can potentially save by leading a frugal lifestyle.
3. Create Multiple Streams of Passive Income
This is a crucial step that you have to take. A single source of income can’t help you to complete the FIRE movement with success. You have to create multiple streams of income to build wealth fast.
A few tried and tested ways of creating multiple income streams are as follows:
- Investing in stocks, commodities, bonds, and real estate.
- Invest in good dividend stocks that pay a good amount every quarter.
- Create a Youtube channel on something you are good at and become a successful blogger.
- Create your own blog and generate a monthly revenue stream.
- Try affiliate marketing to make additional money.
- If you have a flair for writing, then take up freelance projects.
- Sell your classic photographs online.
- List the unused portions of your home on Airbnb.
- Become an online coach.
- Sell your homemade products online and make money.
Once you can generate sufficient income to get everything that you have noted down on your list, you can retire at 40 and fulfill your traveling dreams. However, there is one vital fact you must be aware of.
You will experience various life events after joining the FIRE movement. Life events mean extra expenses. You have to be careful about these expenses. You have to remember your lofty goal.
When you remember what your goal is, it will be easy to spend less during your life events and save money.