What is FIRE and how can YAFA help you achieve it?
10 December 2024
Financial Independence, Retire Early — or FIRE — is more than just a catchy acronym. It's a movement that has changed the way millions of people think about money, work, and freedom.
What is FIRE?
At its core, FIRE is about building enough wealth to cover your living expenses indefinitely, giving you the freedom to work because you want to, not because you have to. The goal isn't necessarily to stop working entirely — it's about having options.
The basic math behind FIRE is surprisingly simple: if you can save and invest enough money so that the returns cover your annual expenses, you've reached financial independence. This threshold is often called your "FIRE number."
Calculating your FIRE number
The most common approach uses the 4% rule, derived from the Trinity Study. This research found that retirees could safely withdraw 4% of their portfolio each year without running out of money over a 30-year retirement.
To calculate your FIRE number:
FIRE number = Annual expenses × 25
For example, if you spend $60,000 per year, your FIRE number would be $1,500,000. Once your investments reach this amount, you can theoretically live off the returns indefinitely.
The different flavours of FIRE
Not everyone pursues FIRE the same way. Several variations have emerged:
Lean FIRE — Achieving financial independence with a minimalist lifestyle and lower expenses. This path requires less savings but demands ongoing frugality.
Fat FIRE — Building a larger portfolio to maintain a comfortable or even luxurious lifestyle in retirement. This requires more aggressive saving and investing.
Barista FIRE — Reaching partial financial independence where you still work part-time for additional income or benefits like health insurance, but on your own terms.
Coast FIRE — Saving aggressively early in your career until your investments are large enough that compound growth alone will fund your retirement, even without additional contributions.
The Australian context
Pursuing FIRE in Australia comes with unique considerations:
Superannuation — Australia's mandatory retirement savings system is powerful but locked until preservation age (currently 60). Your super balance counts toward your FIRE number, but you'll need investments outside super to bridge the gap until you can access it.
Property — Many Australians hold significant wealth in their family home. While this provides security, it doesn't generate income unless you downsize or use equity release products.
Tax efficiency — Understanding the interplay between income tax, capital gains tax, and superannuation tax can significantly impact how quickly you reach FIRE.
How YAFA helps you achieve FIRE
This is exactly why we built YAFA — Yet Another FIRE App. We know the journey to financial independence can feel overwhelming, especially when you're trying to account for Australian-specific factors like super, property, and our tax system.
Track your complete financial picture
YAFA gives you a single dashboard where you can see everything: your income, expenses, assets, liabilities, and superannuation. No more scattered spreadsheets or guesswork. You'll know exactly where you stand at any moment.
Calculate your personalised FIRE number
Your FIRE number isn't one-size-fits-all. YAFA calculates it based on your actual expenses, adjusted for your lifestyle and goals. We factor in inflation, property ownership, and whether your home is part of your retirement plan.
Project your path to financial independence
The most powerful feature of YAFA is our projection engine. You can create different scenarios — what if you increased your savings rate? What if property values grow faster than expected? What if you paid off your mortgage early?
Each scenario shows you:
- When you'll reach FIRE
- Your projected net worth at any age
- How your assets will grow over time
- The impact of different investment strategies
Account for the super gap
One of the trickiest parts of FIRE in Australia is the "super gap" — the years between when you want to retire and when you can access your superannuation. YAFA models this explicitly, showing you how much you need in accessible investments versus what can stay locked in super.
Compare strategies side by side
Not sure whether to focus on paying off your mortgage or investing more? YAFA lets you run multiple projections and compare them directly. See the trade-offs in concrete numbers, not abstract advice.
Start your FIRE journey today
The path to financial independence starts with understanding where you are and where you want to go. YAFA gives you the tools to do both.
Whether you're just starting to explore FIRE or you're well on your way, having a clear picture of your finances and a roadmap to your goals makes all the difference.
Ready to see when you could reach financial independence? Join YAFA and create your first projection today.