What is Barista FIRE and How You Can Retire Even Earlier With it

Some days, when you are working in your office and you stare out the window, you lose track of time. You are brought back to reality by your coworker asking for that mail. On days like these, you wish you were working in a cute little café and had a much more peaceful lifestyle instead. Such thoughts make you want to leave the hustle and bustle of corporate life and live more tranquility. Living in the Snow White and the Seven Dwarfs house is the perfect house to live in. However, that doesn’t exist. Sad. 

We can look for something similar. The same kind of efficacy. 

Well, Barista FIRE can bring that to you. Having retirement funds that enable you to leave your full-time job and retire early is the cornerstone of the Barista FIRE movement. According to the theory, your investment income has now surpassed the threshold at which the 4% rule fully covers your annual costs. This implies that you are free to quit your existing position. However, a part-time gig or a side hustle is employed to bring in extra money to pay anything over and above your typical annual costs.

Your retirement funds should be able to last you somewhere between 30 and 50 years if you treat the money invested in this manner. You look for what is referred to as a Barista FIRE job that provides the extra revenue you require to live that much more comfortably. As Starbucks coffee store provides health insurance to its part-time employees, the moniker Barista FIRE is used. 

Given the high expense of health insurance in the US, this was a significant thing, since it allowed individuals to transition to part-time employment.

Although it isn’t necessarily a real, responsibility-free retirement, it is a method to get there more quickly and much more hassle-free than you would with traditional financial independence. 

How to achieve Barista FIRE?

Knock off some of your debt: It’s a good idea to reduce your debt levels if you intend to retire earlier than the typical retirement age. When you manage your money well, both your annual spending and your Barista FIRE number—the amount you need to retire early—fall. Lowering your debt is essential if you want to become financially independent.

Making investments and saving: Reaching your Barista FIRE number will be less complicated, the more money you can save. You should search for savings accounts with the highest rates of interest. Develop your investments as well. Your yearly costs will be covered by the investment income that results from this. Your net worth may be greatly impacted by a solid, well-balanced investment portfolio. Side note, investing in your 20s is a different experience than investing in your 30s and 40s. Although taking risks is a part of investing and riskier financial endeavors do provide a unique thrill, it is of great essence to keep in mind that it can and will affect your retirement situation in the future. 

Side hustles and acquiring extra cash:  You may increase your income with a side hustle to reach Barista FIRE. This is something you do in addition to your day job to earn extra money. Increasing your income can help you achieve financial independence much more quickly and quit your day job. The following are some examples of side jobs, some of which will bring in passive income:

• Online store sales for Kindle Direct Publishing
• Blog Posting Online (Ironic as you read this in a blog)
• Side jobs can be anything that increases your income in addition to your regular employment.

If you can find passive income sources, you may use them to supplement your investment income and pay for any leftover costs.

Existing on a budget: Take charge of your finances if you want to attain Barista FIRE and have enough money for an early retirement. This entails going through your expenses and making savings where you can. You might need to give up certain items and make some concessions if you want to escape the rat race as quickly as possible. Remember how I mentioned Snow White earlier? She lived on austerity and sang to birds and animals the whole day. That’s our goal here. 

Create a substantial emergency fund: Life frequently throws a witch in the plan. While it’s important to make sure you can pay your bills, you also need to be confident in your ability to handle adversity. Make sure you have enough money saved up to last at least three months if you are unable to work. 

Cons of Barista FIRE 

Just like everything, this also has its drawbacks. The requirement to continue working and relying on an employer for support is a glaring drawback of Barista FIRE. Barista FIRE is not for individuals who wish to live a life of independence without having to answer to anybody. This concept of retirement also relies on maintaining a spending plan and practicing some degree of frugal living. It might not be the ideal choice if you want to live without a budget or expect your spending to rise in the future.

Remember why you’re doing this and the lifestyle it will lead to if you need encouragement. Join the FIRE movement and surround yourself with people who will encourage you when times are rough.

• Control hazards: To safeguard your net worth, you must keep track of your investments. Make sure your portfolio is balanced and not overexposed.
• Safeguarding assets: To attain your goals, you must safeguard your assets, which include anything that increases your net worth. 
• Preparing for health care: It means making sure that your health is taken care of while you work a part-time job or a side business. Being unable to work due to illness might significantly impede your progress.

In the end, Barista FIRE encourages you to do what you enjoy doing. Life is too short to waste it sitting behind a desk and staring at the clouds. You could always retire later but will end up repenting that you wasted the peak of your life not experiencing the greater things in life. This blog is an ode to those who wish to enjoy their life more.