FIRE movement: How to save 80-90% of your income?

Increasing your savings rate from 30% to levels as high as 80-90%, as seen in the FIRE (Financial Independence, Retire Early) movement, is indeed ambitious but achievable with the right strategies and mindset. Here are some ways people have successfully increased their savings rates:

1. Increase Income: While much of the FIRE content focuses on saving and investing, boosting your income can have a significant impact. This could involve negotiating a raise, changing jobs for a higher salary, starting a side hustle, or developing passive income streams. Higher income, while maintaining or only slightly increasing your expenses, can dramatically boost your savings rate.

2. Drastic Expense Reduction: Look at your largest expenses typically housing, transportation, and food. Some individuals achieve high savings rates by downsizing their living space, relocating to a less expensive area, or opting for public transportation instead of owning a car. Others adopt extreme budgeting techniques, like meal planning or cutting out non-essential spending.

3. Automate Savings: Automating your savings can help you stick to your goals without being tempted to spend the money. As soon as your paycheck arrives, have a system in place that diverts your targeted savings amount into a separate account.

4. Lifestyle Changes: Embracing minimalism or a more frugal lifestyle can reduce the desire to spend on non-essentials. This doesn’t mean living without any enjoyment, but rather prioritizing spending on things that truly add value to your life.

5. Invest Wisely: Efficient investing can help grow your savings faster. Consider low-cost index funds or ETFs, which are popular within the FIRE community for their broad market exposure and low fees. The returns from these investments can then be reinvested to compound growth.

6. Community Engagement: Engag

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Hi Grace,

10% is indeed a good starting point, but as you’ve seen yourself (nice work by the way) it’s possible to do a lot more :)

Saving 80% or more is actually very rare so not something I’ve seen very much at all to be honest. Most people, from my experience, sit somewhere in the 40-70% category, providing they have pretty decent household income.

My own personal record was something like 75% at the peak, with a dual income household, low expenses with no kids.

The general way to achieve this is with more of a philosophy, more so than the individual tactics.

For myself and most people it comes from systematically attacking each area of spending to minimise the cost while still enjoying an acceptable quality of life.

Start by going after the biggest expense first, all the way down to the smallest. And question very decision you make. From the food you buy, where you live, what you do on the weekend, which car you own, your daily habits, all of it.

It can also be boosted greatly by increasing one’s income wherever possible. Again, always trying to balance living a decent life now while making good progress to your financial goals.

Shameless plug, but I went into great detail on maximising savings rate for FI this in my book ‘Strong Money Australia’ which you might find useful :)

Cheers, Dave