Barista FIRE – Both financial freedom and pursuit of passion

1. What is Barista FIRE?

40 years old is a strange milestone

  • The boys, after working hard since graduating from school, now have a stable job, have a good wife and children, and suddenly feel bored because they know they won’t get rich by doing that anymore.
  • Girls, after their children grow up, suddenly realize that they haven’t done anything they like for many years and their youth is gone. They suddenly get bored with the job they are doing and want to open a small shop.

In our group of 10 people, if asked, probably 7-8 of them would like to open a coffee shop or a small beer garden. When asked why, everyone would say:

  • I have 2 hours of coffee every day, so I stopped opening a shop with a place to meet friends to relieve my sadness
  • Do the same thing again, this age can’t compete with anyone, open a shop for leisure
  • Coffee is my passion. Now that my children are stable, I have a house, I have a busy job, so I can make time.

In personal finance, there is a term called Barista FIRE

  • Barista: Bartender
  • FIRE: Financial Freedom and retire early

Barista FIRE describes the method of financial freedom, but without retiring but continuing to work and pursue your passions.

Personal financial freedom

Learn the method to financial freedom with Topi

2. How is Barista FIRE different from other FIRE methods?

We talked about FIRE:

  • Traditional FIRE: Work hard and accumulate at a rate of 50-70%, reach a portfolio and then retire without doing anything with 9 steps according to the instructions here:
    • Advantages: quickly achieve financial freedom
    • Disadvantages: Retirement is extremely boring, in addition, financial discipline is extremely harsh
  • Coast FIRE: Calculate the amount of money needed when retiring at age 60-65, then calculate it back with compound interest to invest an amount at the present time. Clip here:
    • Advantages: There is a gentle roadmap to prepare for retirement
    • Disadvantages: Time is quite long

According to my ranking, Barista FIRE is right behind Coast FIRE in terms of ease of making.

3. How to calculate Barista FIRE?

Mathematically, it is extremely simple as follows

– You estimate your expected annual spending when you reach financial freedom at the current price.

– You subtract the amount of income you can bring in from jobs you are passionate about or passive income

– You divide the amount by the average investment return – inflation

You will have a Barista FIRE number so you can continue to strive, this number will be much easier than the regular FIRE number.