Have you ever imagined becoming a world rich person like Warren Buffett or Elon Musk? Perhaps most people would have thought about it at least once in their lifetime. While it would be nice if that happened in real life, the reality is that just imagining things can’t change anything. But even at this moment, countless people are working hard to make that imagination a reality.

Nowadays, especially ‘people who want to escape the 9-5 grind and dream of creating time and financial freedom’ are increasing. According to a survey of 1,000 adult men and women aged 19 to 59 nationwide by Embrain Trend Monitor, a market research firm, 61.5% of respondents in 20s and 40s said they would like to retire before the age of 50.

This social movement is called the ‘F.I.R.E Movement’. So, what does ‘F.I.R.E’ mean? FIRE stands for Financial Independence, Retire Early. Namely, It is a movement of people who aggressively save and invest to reach financial independence early, retire earlier and reclaim control over their lives. Originally, it was a movement that was popular among young, highly educated, and high-income people in the U.S. after the global financial crisis hit in 2008. However in Korea, a new lifestyle has been spotlighted by the MZ generation after COVID-19.

The Characteristics of the Fire followers

The Fire followers try every possible means to become economically independent. They are characterized by maximizing their current assets by minimizing unnecessary consumption and maximizing making deposits, installment savings, frugality and investment. Their strategy is to earn a certain income while working, minimize consumption from that income, and maximize assets. They mainly focus on saving their income and frugality because they dream of retirement in their late 30s to early 40s.

Another characteristic is that most of them are ‘active investors’. They are active in the financial market for ecoonomic independence. In reality, according to a survey conducted by JobKorea, 50.7% of the respondents were investing. In other words, many Fire followers don’t mind high-risk- high-return products as long as they can maximize their assets rather than stable products. 

Background of FIRE movement

Even before the Fire, we’ve come across different lifestyles. For example, there are the Dink followers, a double-income, no-child family, or the Neet followers, who had no will to work and moved around with part-time jobs instead of working. Since then, there have been the Yolo followers, who put priority on the happiness they can enjoy now. Through several stages, all these groups have something in common that has not changed. It’s just that their aim, after all, is their happiness, and they’re willing to invest generously for that purpose.

Experts said that the social movement is also related to the trend of social media. Regarding the reason why the Fire followers have recently emerged in Korea, Seo Yong-gu, a professor of business administration at Sookmyung Women's University, said, “The MZ generation tends to be connected to social media such as Instagram and Facebook in real-time, so they have a strong tendency to be identified with their way of life and values with social media. It is interpreted that the Fire trend, which has been popular among English- Americans since the financial crisis, has also been introduced to Korea via social media.”

Merits and Demerits of FIRE movement

Reading up to here, some of you may be thinking about becoming a Fire follower. There are a few attractive aspects of the Fire movement. The biggest advantage of this is that you have the freedom to retire and find and do what you want to do. You also have ample funds for retirement, and It allows you to earn money even when you’re not working. In other words, the quality of life is improved by the life of time freedom and financial freedom.

However, we also need to see the uncomfortable truth behind it. These are people who try to reduce consumption as much as possible. As a result, you have no choice but to live very sensibly on what you want to do. You have to reduce consumption for yourself first to reduce overall consumption, as there are essential expenses like taxes. In the long run, it could also worsen the country’s economy. At a briefing on the operation of price stabilization in June 2020, Bank of Korea Governor Lee Ju-yeol expressed concern that “super-savers with extreme hedging tendencies are on the rise,” and that “the recovery of consumption and investment, one of the pillars of growth, could slow down.” This is because there is a risk that a decline in consumption could lead to deflation, in which economic growth and inflation fall concurrently. Can you actually become financially independent?

The possibility of Fire followers

According to ‘Playing with Fire’ by Scott Rickins, saving 25 times the annual cost of living allows for financial freedom. If you can make nearly 5-6% return on real estate or investment products, you can prepare for inflation and market decline without having to work. Practically, if you calculate the cost of living directly and collect 25 times that number, your chances of success are almost 100%. To say all this is nonsense, you can see many people around YouTube and Instagram, and can see many young Fires who have achieved financial freedom. All of them are successful cases.

However, there is also an opinion that this is only a theoretical calculation. James Choi, a Korean professor at Yale University’s business school, warns that “asset income could decline significantly in the event of an economic downturn. If the stock or real estate markets do not continue to grow, a certain amount of asset income will not be guaranteed, which could lead to a tragedy in which asset size is drastically reduced”. Jared Dillian, an investment strategist who writes for Bloomberg News, also pointed out that “the Fire model is possible only when the situation in the capital market continues to be good. Even if asset size rises in the long run, if it decreases immediately, there is a need to look for a job again.”

Then, what do they really want?

In the end, however, the Fire movement suggests not the idea of getting rich, but the pursuit of freedom to live doing what I want to do when I want. Behind the idea of ‘how much money can I save and how best to use those assets in order to live my life without worrying about money?’ a desire for freedom to choose one’s own life was hidden.

Scott Rickins, author of ‘Playing with Fire’,says that retirement is not the answer to every problem. In other words, if what you want is freedom rather than money, such as changing your lifestyle to meet your life goals and pursuing a match between your choices and what you think is important, freedom is within your reach without retiring early. We are now in an era when people answer that the ultimate goal is to quit and the dream is to retire. We will have to take a deeper look at what has made people yearn for freedom and why the extreme method of early retirement is emerging as a way to achieve freedom.

(Image source(in order):yahoo, unsplash,financialsamurai)