If You’re Young, Your Goals Won’t Cost Much

Have you ever wondered, what if financial freedom took less efforts? What if you could choose both enjoying your life and become financially free at the same time? What if it wasn’t YOLO or FIRE, but YOLO and FIRE? If you’re in your 20s, stop whatever you’re doing and read this.


This post will help you plan your life in an efficient manner such that you reach your financial goals with the least possible efforts. At the same time, you won’t have to sacrifice much of your life. Believe me, what I’m about to share with you is the perfect combination of YOLO and FIRE.


What Can Help You?

If you’re in your 20s, time is on your side. Compounding will make your life a lot easier when planning your finances. I know what you’re saying, “Isn’t this post telling the same thing that everyone else says? Invest for long term, and let it compound….”


To be honest, yes the concept is same, but the effort that you need to put in and the sacrifices that you must make are significantly smaller in this case. You’ll be able to spend more on experiences using this method, enhancing your overall life happiness.


Challenging Traditional FIRE

FIRE stands for Financial Independence, Retire Early. You might have heard it everywhere that you should save 10-20% of your income and once your investment corpus reaches 25 times your annual expenses (4% rule), you are free to quit your job.


All this sounds great, but have you ever thought how much time does this take? Let’s take an example of someone who is 25 years old and saves 10% of his income. This gets invested at 10% and let’s assume that his income grows at 8% and inflation is 6%.


It will take around 3 decades for this person to become financially independent. Do you really want to wait this long? Do you know that this person needs to invest ₹2.5 crore over these 3 decades.


Let’s increase the savings rate to 15% and see what happens. This person would need 27 years (hardly a difference from the previous case), and would be investing around ₹2 crore over this time period.


Even with 10-15% of savings one needs to continue putting money for almost 3 decades. Then what can one do? The answer is simple. Invest aggressively for the first few years, and you won’t need to invest any more in future.


If you start with a savings rate of 50% initially, you would need to invest for just 6 years, and the amount needed would drastically decrease to ₹20 lakh — tenth of what was required in the previous case. But, you won’t be able to retire in 6 years, at the age of 31. Whatever you’ve accumulated in the first 6 years, would make you ready to retire at the age of 60. And, you won’t need to add a single rupee from age 32 to 60.


Isn’t this scenario great, and way better that the previous two scenarios, where you had to grind for 25-30 years. Now, after the initial 6 years, you don’t have the need of a high income. You can take up a job that covers just your expenses (because you don’t need to invest at all). Or, you can start working on your passion — the opportunities are endless.


Coast FIRE

The last scenario which you looked at is Coast FIRE. It is the point where you’ve saved enough for your retirement that if you let the money grow (without even adding more money), it will be sufficient to support your retirement.


This path is ideal for people who want to achieve FIRE, but want lesser amount of stress. As we saw, traditional FIRE requires you to continue saving for 25-30 years, and also takes up higher amount of savings.


Although, you may not retire early, but after the heavy lifting of 5-7 years, you have the freedom to work on your passion, or even get a part time job that just covers your expenses.


Why Is Coast FIRE Better?

Now that you are familiar with the concept of Coast FIRE, let’s see why this is better.


Efficient Use of Money

With Coast FIRE, you need to do the heavy lifting for the first few years, and after that you can ‘coast’ your way to financial freedom. If you increase your savings rate from 10% to 50%, the amount that you invest drastically decreases by over 90%.


Not just money, Coast FIRE also saves up huge amount of your time. Talk about 5-7 years on one hand, and 25-30 years on the other. Which one would you choose? Obviously, the first one.


Greater Financial Flexibility

Let’s say you’ve reached Coast FIRE in 6 years (starting from the age of 25). Now you have 29 more years left in your career. As you would be saving around 50% of your income, you could use that excess money for something else — like paying off your home loan early, or going on an exotic vacation every year. Because, why not! You don’t need to save anything for your retirement.


As we saw earlier that as your savings rate increases from 10% to 50%, the amount that you invest goes down by 90%. This 90% is literally your free money. You can use this to do anything else other than saving for retirement.


Live A Semi-Retired Lifestyle

Once you’ve done the heavy lifting in the initial years, you are free to quit your high-stress job if you want. Because you can afford to do that now. There is no need to keep on climbing the corporate ladder now. You are free to follow your passion and take up a part time job that you find more fulfilling. You just need to cover your expenses.


On the other hand, if you still love you current job, you now have excess money every month after covering your expenses. You are free to use this however you want — which puts us back to greater financial flexibility.


How To Plan For Coast FIRE?

You might say, “All this is great, but how do I plan for this?”. The key with Coast FIRE is getting your initial corpus set up as quickly as possible. You need to have a high savings rate and for that you have to cut down your expenses and increase your income.


To know when you could achieve Coast FIRE, there are 4 variables that you need to consider.


  1. Savings Rate: This matters the most when you are building that initial corpus.
  2. Returns: This is where compounding will play a big role. Even if you compound at 10-12%, that will turn out to become a huge amount over time.
  3. Current Age: How much time you give your money to compound depends on your current age. The earlier you start, the lesser you need to contribute.


To make your life easier, I have created a google sheet that will help you plan your Coast FIRE.



Enter your details in the yellow cells and you’ll the age when you can FIRE and achieve Coast FIRE. I would recommend you to not increase the growth in income and expected returns just to be conservative.


Closing Thoughts

Coast FIRE is probably the best form of FIRE which makes the best use of both your money and your time. All you have to do is 5-7 years of heavy lifting to build an initial corpus, then you’re set for life.


The beautiful thing about Coast FIRE is that you don’t need to wait until you’re fully financially independent to experience freedom and make your life more fulfilling. This is why Coast FIRE is such a special financial milestone. Plan your financial future in this google sheet to know how long it might take you to achieve Coast FIRE.


Till next time.



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