For this reason, several other terms have been created taking into consideration the option to continue employment or have side hustles. Today, I am going to cover a few of these terms and the term I like to use and the reason behind it.
Financial Independence Retire Early
Financial Independence Retire Early(FIRE) is a movement that has gained a lot of momentum in the last decade as workers are looking for more freedom in their lives. This traditionally involves cutting back on your expenses and putting all excess money into savings for financial independence. Even within the FIRE movement, it can be further grouped into several sub-movements with the most popular being Lean FIRE and Fat FIRE.
Lean FIRE is where you live a minimalist lifestyle; therefore, you will need to save a much smaller amount in order to reach financial independence. However, you are also living off a smaller amount of income; hence, the name Lean FIRE.
With Fat FIRE, you do not limit yourself on how much you spend during financial independence. Perhaps you want to keep your same standard of living or even up it. Fat FIRE is where you do it. You will need to save much more to reach Fat FIRE and it will take longer to reach this goal compared to Lean or traditional FIRE.
Even when you reach FIRE, it can be scary for many as you are likely leaving your job right in the middle of your prime working and money-making years to live off your savings indefinitely.
Financial Independence Work Optional
The use ofFinancial Independence Work Optionalis my preferred term as it keeps the option for work in play. When you use “Retire Early” and then work or have a side hustle, then it is not really retirement.
With Financial Independence Work Optional, at any point in time, I can flip between retirement and work because it is “optional”. This provides broad choices once you reach financial independence.
Financial Independence Recreational Employment
Another FIRE term has started to gain popularity taking into account the potential for continued employment after reaching financial independence—Financial Independence Recreational Employment. The definition of recreational is an activity that is enjoyable. Therefore, recreational employment means to work in a job you enjoy.
When I first heard this term, I thought it was genius. It perfectly described the lifestyle I want to live. But after further reflection, I decided to stick with my preferred term of Financial Independence Work Optional. While not as catchy, it has certain implications that fit our lifestyle better.
- Financial Independence Recreational Employment implies continued employment
This term implies you probably have reached some sort of financial independence (e.g. Lean FIRE), but still have a job to help maintain the independence. The job, however, is not one that must be a huge money maker or have a high salary. It’s not how much you make at this job, but the fulfillment of the job now. You are now working in a job you truly love.
- Work Optional implies employment is not required
With Work Optional, it means you have a true work optional life. If you want to work, then that’s your choice. If you don’t want to work, then that is perfectly acceptable and not needed to be financially independent.
- Financial Independence Recreational Employment is not full financial independence
Financial Independence Recreational Employment means you will still rely on employment for your livelihood for the foreseeable future. While you are now further along the journey to true financial independence, you can find a job that you enjoy doing with less regard to the salary.
- Work Optional is true financial independence
In order to live a work optional life, you must reach true financial independence without the need to find employment afterwards. It will likely take you more time to make it to work optional life and recreational employment is a good steppingstone.
Alternative to Financial Independence Work Optional
An alternative to Financial Independence Work Optional isFinancial Independence Optional Retirement(FIOR). Both support the option to work upon reaching financial independence. They both also infer you reach true financial independence and can choose to work or retire.
While they are both referring to the same work optional life, I still prefer Financial Independence Work Optional because when you say “retirement” it refers to stopping all work. There are the retirement police out there who may criticize you if you say you are financially independent and retire early, but then take on side hustles or heaven forbid—work! With work optional, work is an option. With optional retirement, retirement is the option. It really comes down to semantics and I support either one of these terms.
Conclusion
Financial Independence Work Optional is the highest level of financial independence you can attain because once you reach this level, you do not need to rely on any type of employment or job to maintain financial independence.
For Financial Independence Recreational Employment, it implies you continue working after reaching financial independence; however, the job is something you enjoy or are interested in doing instead of having to do it for money. This job may also not pay as much as your job prior to reaching financial independence.
If you want to get an early start on financial independence, then you should save enough to get you to Financial Independence Recreational Employment. This will allow you to find a job you love doing that may not pay as much as you currently make then supplement it with your financial independence savings. This hybrid approach will allow you to continue saving for financial independence with your recreational job until you can reach Financial Independence Work Optional.
While this approach may slow down your journey to true financial independence, you’ll enjoy the journey a lot more since you are now doing a job you love.
The journey to financial independence should be one that is enjoyed along the way. Psychologically it will take a toll on you if the journey takes a long time to get there and you are focused on grinding and grinding everyday until you get there.
What are your thoughts on FIRE and its other terms?
Discussing how to improve your personal finances is one of the things I discuss in myFREE Financial Independence Plan Frameworkguide that you can download below.
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