The financial independence movement spawned a host of spin-offs. People tweaked the original idea, developing paths to financial freedom that fit into their unique lives.
Barista FIRE rose to the top as one of the most popular types of FIRE, but it also serves as a stepping stone to true financial independence.
Find out if Barista FIRE is your ticket to freedom.
What is Barista FIRE?
Barista FIRE is a form of financial independence where you don’t actually quit working. Instead, you leave your high-stress, high-pay job to work part-time in a laid-back, less stressful position.
When you reach Barista FIRE, you have a nest egg big enough to pay for most of your living expenses. The job simply fills in any gaps, like providing extra pocket money, covering health insurance, or relieving boredom.
Barista Fire is a step between being financially independent and being tied to a job on the stairway to financial freedom. It’s one step closer to true financial independence than Coast Fire.
Why is it Called Barista FIRE?
The original Barista FIRE advocates dreamed of quitting their jobs to work in a laid-back community coffee shop. They thought serving up sweet drinks a few days a week would be easier than whatever they’re doing now.
Hence, Barista FIRE, because they’d work casually as baristas.
Barista FIRE vs Coast FIRE
fizkes via Shutterstock.com.
A lot of people use Barista FIRE and Coast FIRE interchangeably, but they aren’t the same.
They are both steps on the path to true financial freedom, but the subtle differences highlight why separating them matters.
With Coast FIRE, you have enough money saved for a secure traditional retirement but need your high-stress job to pay today’s bills. It’s a critical milestone on the journey to freedom, so knowing how to calculate your number is essential.
The most crucial difference between Coast FIRE and Barista FIRE is that you still need that stressful job with Coast FIRE, while you get to quit it and do something else with Barista FIRE.
That puts Barista FIRE a step past Coast FIRE on the journey to true financial independence.
Advantages of Barista FI
Some people don’t want what I like to call “true financial independence,” which is quitting your job and never working again.
People want to work for the social aspects or the benefits.
The advantage of Barista FIRE is that it offers both while giving you a little bit of pocket money.
Healthcare Benefits
Benefits are the biggest advantage to living a Barista FI life.
Unfortunately, the healthcare system in the United States is still a joke, and most insurance is tied to employment. Getting sick is a huge privilege; a healthcare emergency can derail even the best early retirement plans.
The system forces people to keep working so they can maintain health insurance coverage.
Although finding part-time jobs with benefits is challenging, if you look hard enough, you can discover them.
Other benefits include increasing your social security benefits, a possible pension, or a company-matched 401K plan. Even if you’re at Barista FIRE, it never hurts to keep investing for your future retirement.
The financial benefits of working part-time can add an extra cushion to all of your retirement investments.
Income
More income is always a plus, right?
Even with solid investments, quitting a high-paying job and having no income can be terrifying. Barista Fire can help you bridge that gap. It gives you peace of mind.
You won’t be making as much as you did before, but having a little bit of income is a great way to ease your worries about the next financial downturn.
The additional income might help you pay for special treats, like dinners out, your coffee habit, or other non-essentials.
Social Benefits
This might come as a shock, but a lot of people actually miss work.
Not the work part, but the people. The social interactions. The community.
Retiring from a job may impact the social connections you’ve built. Often, you will find that the coworkers you labored with for years aren’t your friends, and you will never hear from them again upon leaving your job.
Even if they werem’t your friends, it’s hard to transition from seeing people daily to never seeing anyone.
Barista FIRE bridges that gap and offers people the social engagement that they crave without the stress and deadlines of the job that they left.
How to Achieve Barista Fire
Achieving Barista FIRE can be challenging. Retiring early with any type of FIRE takes dedication, financial planning, and perseverance. However, it is attainable.
Here is what you need to do to achieve Barista FIRE.
Make a Plan
The first step to achieving any type of financial independence is to make a plan. Those who fail to plan are planning to fail, after all.
Your financial plan must include your monthly expenses, sources of income, investment accounts, retirement accounts, expected inflation, and any other information that can help you achieve your Barista FIRE goal.
Calculate how much money you need in pre-retirement investment accounts to cover your expenses. Set a realistic timeline for achieving this number and incremental goals to check your progress.
Don’t expect to achieve financial independence overnight. Depending on your current financial situation, it may take five to ten years to achieve the financial security you need to retire early.
That’s okay.
It may seem like a long time, but it’s far shorter than the 30-40 years it would take to reach full retirement.
Pay Off Debt
Part of your plan should include a goal to pay off debt. Imagine how much money you would save each month if your paycheck weren’t going to credit card debt, student loan repayments, and car notes.
Paying off debt is imperative to achieving your early retirement goals. Debt is like a ball and chain hanging over your shoulders, preventing you from doing what you want. Make getting out of debt a top priority when developing your financial plan.
It helps to consider how much less money you will need each month if you don’t have any debt to pay.
That’s the amount you will need for your Barista FIRE life.
Invest
Some experts will tell you to pay off your debt before investing.
Those experts are wrong.
You must start investing as soon as possible, even if it’s less than $100 a month.
Investing works due to the power of compound interest. The longer your investment horizon, the more money you will make. Time in the market beats timing the market every time. So start now.
My favorite investment vehicle is low-cost index funds. Index funds are diversified and track specific market sectors, so they carry less risk than individual stocks.
Of course, no investment is 100% risk-free, but index funds are the best option for growing your money.
Supplement Your Income
Jack_the_sparow via Shutterstock.com.
It sounds great, but what if you don’t have enough money to save, invest, and pay off debt?
You need to make more money.
Start a side hustle or take extra shifts if your current job pays overtime. Adding additional sources of income will help you pay off debt faster and invest more money every month.
Another perk of a side hustle is that it gives you a backup plan in case you lose your primary job.
Although it may not be enough to sustain you, having a little bit of money will help you stay on your feet while looking for new employment.
Find Your “Barista” Job
Before you ditch your job, you need to figure out what comes next. Maybe you want to be a traditionalist and work as a barista, but you might prefer something else, like retail, bookkeeping, or consulting.
The most crucial aspect of deciding what to do next is figuring out why you want to keep working.
If you need healthcare, you must find a part-time job that offers benefits. If you’re bored and want something to do, consider working in an industry you enjoy.
For example, if you’re a hobby artist, you may want to work in a craft store to get discounts on art supplies.
Your reasons for choosing the Barista FIRE path are your own. Choose a post-career job that aligns with your personal and financial goals.
Is Barista FIRE Right for You?
To decide whether Barista FIRE is right for you, you must first ask yourself whether you want to keep working.
Some people don’t want to work, and there is absolutely nothing wrong with that. Some people like working, and that’s fine too.
Next, consider how badly you need to quit your job. If it offers a high income in return for a terrible work/life balance or is detrimental to your mental or physical well-being, you may want to quit sooner rather than later.
Money isn’t everything, and Barista FIRE might be a better option if your job is hurting you.
On the other hand, if you hate your job because you hate the entire idea of working, Barista FIRE might not be the best path. Why trade one job you hate for a lower-paying job you also hate? In that case, it might be better to stay at a high-paying job long enough to achieve financial independence in the traditional sense.
Testing Financial Independence
Sometimes we don’t know what we want, and that’s okay, too.
Barista FIRE offers you a way to dip your toes into financial independence without taking a full plunge.
When you work part-time, you get to see how you spend your free time. Are you bored, or do you crave even more?
You also get to test your budget. Can you survive without the income? Is your withdrawal rate manageable?
Bridging the gap between working full-time and retiring completely will give you a better idea of what you really want (and your limitations)
It’s a perfect way to bridge the gap between working full-time and taking the plunge into financial independence.
Many Paths to Financial Freedom
Barista FIRE is just one of many paths to financial freedom. Some pursue Fat FIRE to live like kings, others hate working so much that they opt for Lean FIRE to enjoy freedom on a tight budget. My favorite is Passion FIRE, a sort-of sister to Barista FIRE that focuses on pursuing your passions. Take our quiz to determine which one is right for you!
A lot of people love their jobs and have no plans to retire early, and that’s okay, too. The FIRE movement provides strategies for building wealth and achieving your goals, whether they include early retirement or not.
Take the parts that speak to you and apply them to your life, and leave the details that don’t apply.
There is no right or wrong way to live your life. Take the path that speaks to you.
I like the idea of barista FIRE, but since retiring we are never in one place long enough to work. Then again, our plan was always to travel and that’s what we do. In a way, I suppose our barista work is overseeing rental properties. There is always stuff to be fixed or spruced up and when we can, we like to do this ourselves.
I’d definitely consider that a type of barista fire. You are still working part time, and you use that income to fund your lifestyle. I think the concept of barista fire is so wide that it can be used for a lot of situations.
I kind of thought barista fire was when you could generate maybe $20k from investments or passive income so you’d still have to work enough to earn another $20k. I’m very fat FIRE but choose to work a day or two a week for entertainment and to keep my network alive and for social contact. So I guess that really is a firm of batista fire! I think most people will work some for all the reasons you described so well in this very interesting post.
Yeah I think the point of Barista Fire is that you still have to work, but it doesn’t have to be full time or stressful. I think there are lots of different ways to think about that and to achieve it though. I definitely would consider working for networking opportunities and social contact a form of Barista Fire…there’s not rule that says you have to work for the money! Thanks for stopping by!
I’m kind of working on this except from an entrepreneurial standpoint. I wonder, would we call it entreFIRE? On a related note, I joined the fire service and then retired early, would I be fireFIRE? Inquiring minds want to know.
You FIRED from Fire!! That’s amazing haha. I have a new term for quitting your “real job” to work on entrepreneurial pursuits, which are generally the things we really want to do. I call it “Passion Fire”