Have you ever caught yourself staring at the clock and praying for the workday to be over? Do you fantasize during the workday about the next vacation you’re going to take when your work gives you more days off? What about tossing and turning on a Sunday night in dread of returning to your workplace the next day?

If you have experienced any of these scenarios then chances are that you would be very interested in the FIRE movement. The FIRE movement is a relatively new mindset that people are adopting to help them quit the rat race earlier and start living a more fulfilling life.

Whether you are an avid follower of FIRE or are just hearing about it for the first time, this article will examine everything you need to know about the FIRE movement and financial freedom in Canada.


What is the FIRE movement?

If you are not familiar, the F.I.R.E. movement is a financial mindset that stands for “Financial Independence Retire Early”. Followers of the FIRE movement are very interested in achieving financial freedom and regaining control over their life. For this article, when we say “financial freedom”, we mean that you are no longer dependent on income from a full-time job or from other people to support your lifestyle.

  The phrase FIRE was first popularized in the 1992 book “Your Money Or Your Life” by Vicky Robin and Joe Dominguez, which has over a million copies sold. The authors argue that if you work for a salary or hourly wage then every time you pay for something you are really just paying with hours of your life. For example, if you earn $15/hour and spend $150 at the grocery store then you have technically paid 10 hours of your life to purchase those groceries ($150 / $15 per hour = 10 hours). A casual lunch including tip? That might cost you one hour of your life.

Once you adopt this mindset, you will begin to change the way that you view your expenses and financial health in general.

According to search data from Google Trends (see below), the term FIRE has been growing since 2011.

Usually, when you think of people who are financially free or “retired early”, you probably conjure an image of famous athletes/entertainers, business owners, or people who come from money. Your mind jumps from people who live a standard working-class life to those who are very wealthy. However, there is an entire segment in between these two classes of people. This class of people no longer has to work all day in order to live but they are also not necessarily ultra-wealthy. This class is where followers of FIRE reside.

The FIRE movement is not a get-rich-quick strategy or a business plan designed to make you a billionaire. Instead, it is a strategy that’s meant to be achievable by almost anyone. It is built off of two simple pillars:

  • Saving – If you want to retire at 35 instead of 65 then you will need to supercharge the amount that you are saving each month. For most people, this means saving about 70% of their income.
  • Living frugally – To achieve such an incredible savings rate there is almost always a huge emphasis on living frugally. Followers of FIRE usually take pride in living frugally just as fitness junkies take pride in eating healthy and exercising. Both parties realize that they are making a sacrifice now in order to reach a long-term goal.

The most common end goal of “Financial Independence, Retire Early” is (you guessed it) to retire early! Instead of saving a small percentage of their income and retiring at income, people who follow FIRE want to save a huge percentage of their income and cut their timeline for retirement in half. That being said, early retirement doesn’t necessarily have to be your end goal. “Financial independence” is a wide-reaching goal that can mean a lot of things.


Is FIRE for you?

Followers of FIRE are usually trying to achieve financial independence. Again, the generally accepted definition of financial independence is that you have enough income to pay for your living expenses without having to be employed or dependent on others.

Once you either have enough saved or earn enough passive income to meet your living expenses, you can are technically retired and will not have to work ever again. The thing is…some people like to work. Is retiring a necessity of FIRE?

Before you start pursuing FIRE, we would recommend thinking long and hard about the following questions:

What is your end goal? Assume for a moment that you have already achieved great wealth and do not need to work. You have already bought everything that you could ever want and have enjoyed a few years of living without the need to work. What would you do with yourself then?’ What type of a lifestyle would bring you happiness assuming that money was no object? This is the type of life that you should be working to build through FIRE.

Are you prepared for the sacrifice? To be incredibly fit and in shape, you will need to work out and eat healthy almost every day. For some people, being fit is well worth the sacrifice of working out and not eating junk food. However, plenty of people would much rather eat whatever they want than be fit. The same is true for financial independence. Some people want to be financially free so bad that they are willing to survive on a minimalist lifestyle for years before reaching their goal. However, some people might not mind their job and would be much happier by spending every dollar that they own. There’s nothing wrong with either mentality, just be sure that FIRE is something that you actually want.

What type of FIRE do you want to follow? There are three main kinds of FIRE:

  • LeanFIRE – You are content on living a minimalist life (spending $25,000 or less) in order to save as much as possible. Even in retirement, you plan on living modestly.


  • FatFIRE – You want to save up several million before you are comfortable retiring so that you will have plenty of money to spend living life on your own terms.


  • BaristaFIRE – You have saved enough to retire early but still choose to supplement your income by working on something that you’re passionate about.


Which of these sounds like your speed? The more thought you put in at the beginning of the process, the more clear your journey will be!

So once you’ve pondered these questions, how do you actually go about retiring early?


How do I retire early?

If FIRE is something that you know you want to start then there are a few simple steps to actually getting started.

Save, save, save – As mentioned, the FIRE lifestyle usually has an intense focus on frugality. This means putting away as much as 70% of your income to be saved. In order to do this, you will need to rethink most of your lifestyle. Things that you used to consider necessities will suddenly be cut out. However, after a few weeks, you will adjust to this new way of living and it will simply be your normal. A good way to get started living this way is to save 50-70% of your income from every check that you get. Set up an instant transfer so that every time you get a direct deposit that money is transferred to your investment account. Physically transferring this money will force you to live on a reduced income.

Invest, Invest, Invest – It is imperative that you transfer this money into some type of brokerage account instead of just a savings account. This is because savings accounts generate almost 0% in interest. On the other hand, most investment accounts will allow your money to grow at a rate of 5-10% each year. Over time, this can be the difference between retiring 35 or 45.

If you only save money (and don’t invest it) then your retirement fund will grow linearly like this:

However, if you invest your money then your retirement fund will grow exponentially like this:

By investing your money, your account will grow significantly larger with very little extra effort on your part. To do this, we recommend using an online broker or a robo-advisor. Using any of these options is significantly better than letting your money sit in a savings account. If you use any of these online investment service, you can expect your money to earn approximately 8-10%, which is the average return of the stock market.

Online brokers

Questrade or National Bank Direct Brokerage are good options. Once you have opened a brokerage account, simply buy index funds that will track the return of the entire stock market. To pick the best brokerage platform to invest, you can use Hardbacon’s online brokers comparison tool.


Robo advisors, such as Wealthsimple or CI Direct Investing, will invest your money for you automatically. Since they operate entirely online with no physical locations, they are able to charge minimal fees. To pick the best one, you can use Hardbacon’s Canadian robo-advisors comparison tool.


Mr. Money Mustache: a Canadian FIRE pioneer

If you are having any doubts that FIRE is an achievable dream then we’d like to share the story of Mr. Money Mustache. Mr. Money Mustache is a Canadian-born man who achieved early retirement and subsequently poured fuel onto the FIRE movement by sharing his story. To read the full version of his story, click here.

Mr. Money Mustache’s story is truly a “savings and investing” road to early retirement. He started his journey as a college grad with no student debt but also a $0 net worth. He worked several engineering jobs to start and earned around $40-$80,000 per year during the next several years (a fairly common salary). However, over the next 9 years, he was able to save enough money to retire. Here are a few of the takeaways from his journey:

Combined saving with his wife – He and his wife shared a passion for early retirement and made it a combined effort to save money. Were it not for this, it very well might have taken him 18 years to retire instead of 8.

Finding cheap living – He almost always lived with a roommate which minimized his rent bill and allowed him to save more money. He and his wife also bought a house fairly quickly after graduating and started boosting their net worth through home equity.

Investment gains – Once he had saved a significant sum, his investment gains started to add a sizable amount to his income. In later years, they would contribute $20,000+ to his net worth.

Mr. Money Mustache’s journey makes it very clear how achievable an early retirement is by simply keeping your goal at the forefront of your mind. Through simple saving and investing from a fairly standard income, he was able to retire in 9 years. With a little tweaking to his strategy, there is no reason why you can’t achieve this too!


FIRE: Setting the wheels in motion

Once you have decided what your end goal is from following the FIRE movement and selected your preferred investment account, it’s time to get to work. Now, the challenge is saving as much money as you can each day in order to grow your retirement account as quickly as possible. Remember, you are trying to do something that takes most people 40 years in under 20 years. The exact numbers will depend on your own financial goals as well as when you start and when you want to retire.

Eventually, you want to have enough money saved so that you can begin to make withdrawals without depleting your account. This is known as the 4% rule.

The 4% rule is a rule of thumb that refers to the amount that you should withdraw from your retirement account every year in order to supply you with income while not depleting your nest egg. To visualize this, imagine your retirement fund as a well that is being refilled by a slow trickle of water. As long as you only take a little water each day then the well will refill overnight. However, if you start to take too much then the well won’t have time to refill and you could risk running out of water.

In the short term, the adjustment in your lifestyle might be a challenge. However, we can assure you that the reward will be more than worth it.

At first, the idea of retiring in your 30s might seem impossible. However, it has already been proven to be an achievable dream since it is something that people do all the time. The key is to create a detailed plan with your end goal in mind. If you are passionate about reaching this goal then you will find it easy to stick with your plan. Who knows, in 10 years, you might find yourself being interviewed as another success story of the FIRE Movement.

We hope that you’ve found this article valuable when it comes to understanding everything that you need to know about the FIRE movement and financial freedom in Canada. If you are interested in achieving financial independence, please download the Hardbacon app and take control of your money!

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