Financial Independence, Retire Early: Practicing FIRE and Its Effects on Consumers’ Lives
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School of Business |
Bachelor's thesis
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Authors
Date
2021
Department
Major/Subject
Mcode
Degree programme
Markkinointi
Language
en
Pages
46 + 2
Series
Abstract
Financial independence, retire early (FIRE) is a relatively popular lifestyle among consumers while little mentioned in the academic field. FIRE refers to a lifestyle with the goal of achieving enough self-generated sustainable passive income to fund desired life choices. It provides individuals a freedom from paid work and a freedom to live a more meaningful life. The traditional approach to consumption includes the assumption that consumers’ aspirations increase alongside their income. In contrast, the FIRE practitioners aim for reducing consumption while maximizing their saving and investing. In this way, they transfer their consumption somewhere in the future, when they can potentially become financially independent and conduct their life-choices without monetary restrictions. This thesis forms a basic understanding of FIRE as a lifestyle movement and how it affects consumers’ lives. It examines previous literature and brings together a definition of FIRE. Furthermore, this thesis adopts a pioneering approach by creating a new framework for understanding the reasoning behind FIRE. This conceptual framework is created based on literature review, and it illustrates the individual’s motivations behind practicing FIRE. This framework consists of two parts: “freedom from” and “freedom to”. First, FIRE provides individual freedom from paid work, consumer debt, materialism, and consumerism. Second, it provides freedom to retire or work from a non-monetary basis, spend more time with family, relatives, and community, more meaningful life, moderate consumption, and financial well-being. This model acts as an important advancement for future research in the field. To broaden the understanding of this field, one semi-structured in-depth interview with a FIRE practitioner was conducted, and it acts as a secondary supportive reference in this thesis. The findings of the interview were evaluated based on the framework, which provides insights of the role of FIRE in consumers’ lives. Altogether, this thesis contributes to the relatively little researched area of FIRE, offers insights for consumers’ motivations to practice FIRE and its role in consumers’ lives. This thesis acts as a base for future research.Description
Thesis advisor
Kajalo, SamiKeywords
financial independence, early retirement, FIRE movement, financial freedom, consumption, lifestyle