Barista FIRE - Your Definitive Guide Towards Financial Independence (2024)

Many people dream of retiring early, and there are some who don’t mind working a little when retired. Is it possible? Can you retire early and get to live life the way you want? Barista FIRE may be the answer you are looking for.

Many people are joining the Barista FIRE movement with one goal in mind, and that is to retire early before reaching the regular age of retirement. To enjoy the fruits of your labor in your younger years is something that everyone would like to do, yet it is a challenging goal.

It’s such a nice, idealistic, but challenging goal if you really do not know how to achieve it.

No matter what you have laid out for your future, you might want to rethink it when you get to know Barista FIRE. Before you start planning your retirement, read on for some more background info.

What Is Financial Independence, Retire Early (FIRE)?

FIRE, Financial Independence, Retire Early is a movement committed to saving and investing enough to retire earlier than the regular retirement that we used to know.

What Is Barista FIRE?

Barista FIRE is a term used that originated from the concept of a coffee barista, and FIRE, financial independence and retiring early. Being a barista is flexible and can be both full-time or part-time in any place on the globe.

Barista FIRE, in simple terms, refers to a life situation where you have achieved financial independence but still choose to work part-time. In this scenario, you will have a much shorter time until retirement because you’ll be working a little and need less money upfront.

For instance, Starbucks provides health care to their part-time employees, making it enjoyable to work toward Barista FIRE.

Having that benefit alone can save us hundreds of dollars monthly without paying out of pocket for expensive private insurance. This is a huge help for employees who live paycheck to paycheck, and it can help them save extra money.

If you’re thinking of working toward early retirement, you need to plan it properly, and by that, you need to earn an income where you can reach your target net worth.

To achieve full financial security means you will have to save money or grow your income-producing assets enough to pay for your living expenses without worrying about running out of money.

[Related Read: 7 Dave Ramsey Baby Steps For Financial Freedom]

How Does FIRE Work?

Now that you have an understanding of FIRE, you will also have to learn how it works.

Supporters of financial independence, the early group has the objective of retiring before the average retirement age of 65. To do so, they would commit as much of their income into savings while they are still working.

Once their savings are 25 times more than their annual expenses, they can quit their jobs or entirely retire from the workforce. To support their living expenses when they retire at a young age, FIRE followers take a small amount of money from their savings, roughly a 4% yearly withdrawal rate.

Two things you can do to achieve the desired savings percentage:

• Keep the expenses low
• Earn more than what they spend

The gap between what you spend and what you earn, you invest. The more you can invest, the sooner you’ll reach financial independence.

The goal of FIRE is to help you retire early by either having a higher income or lowering your expenses, and these methods are the fastest way to be financially independent.

How Does Barista FIRE Work?

Barista FIRE motivates you to have a part-time job or a prevalence of freelance work while retired. The income you receive from this will be added to your passive income streams from your investments to supplement the life you want once you retire.

There are 4 types of FIRE:

• Barista FIRE, where you work part-time during your early retirement.
• Lean FIRE, where you live frugally during your early retirement.
• Traditional FIRE, where you plan for a slight upgrade or keep to your current lifestyle during retirement.
• Fat FIRE, where you plan to spend much more in early retirement than what you’re currently spending.

Out of these 4, Barista FIRE means you need less money when you want to retire, as you’re still working a couple of hours per week.

Imagine retiring early, no more working for 40 hours per week, no more sleeping late, and waking up early the next day! Of course, you can now do the things you want at your own pace without even worrying about the day-to-day expenses.

With Barista FIRE, expect that you will work just 10-20 hours per week or less, depending on your choice, from a part-time job with benefits or the freedom of freelancing.

How Much Do I Need To Barista FIRE?

Now that we have understood more about Barista FIRE and how it works, let’s start with how much you need to be a Barista FIRE. The idea is to save more and reduce work with Barista FIRE, how are you going to do it?

Here is an example of how much you need to Barista FIRE.

For instance, your annual take-home pay is $70,000. Assuming that you spend $3,000 monthly and you’re planning to utilize the rule of 25, where you’ll take 4% out of your portfolio to live off of.

Spending $3,000 a month or $36,000 a year would involve a portfolio value of $900,000 to FIRE (36,000*25 = 900,000).

If you save and invest 50% of your net earnings or $35,000 per year. It would take you about 14 years to reach your portfolio value of $900,000 with a 7% yearly return.

Suppose you earn $1,500 monthly with your Barista FIRE job; you’d only need $1,500 per month. That decreases your target portfolio by $450,000. So, your new goal would be: $900,000 – $450,000 = $450,000

To calculate your FIRE number in a simple equation, multiply your estimated annual expenses in retirement by 25. For instance, $40,000 x 25 = $ 1,000,000; this number is what you will need to save for you to retire.

While with Barista FIRE, you still have to calculate your traditional FIRE (like we did). Then you factor in how much you have from your part-time job, side hustle gig, or residual income. After that, you will have to subtract the amount you will earn from your expenses to get the result you are looking for in Barista FIRE.

It may require some math, but the result is the number you will need to save before you can leave your day job or full-time work. Knowing how much you have to save will allow you to retire years earlier.

Benefits Of Barista FIRE

Even though Barista FIRE may seem like a hassle or a long journey for you, some benefits may encourage you to do it. Here are some reasons to Barista FIRE:

Stress-Free Lifestyle

Barista FIRE reduces the money you have to have in order to achieve FIRE, making the procedure easier and more quick.

Barista FIRE may not necessarily mean to be burden-free once you retire, but it is a way to attain a stress-free lifestyle. Especially when compared to your state before financial independence.

Barista FIRE Takes Care Of Your Health Expenses

Another benefit of Barista FIRE is it ideally covers the expensive part of retirement, which is healthcare. Most people who are working find it difficult to leave their full-time jobs due to their employer’s health insurance.

Who wouldn’t be right? Healthcare in America has become one of the most significant expenses for retirees, even with Medicare benefits that start at the age of 65. With a huge amount of expenses with health alone, many people would refuse any medical assistance.

You Can Retire Early With Barista FIRE

With Barista FIRE, you can retire faster than your typical financial independence journey. You can say goodbye to long hours and your stressful job environment. From working 40 hours a week to 20 hours of work weekly.

With a lot of free time to spare, you can now enjoy the things you want to do. No more long and often unpaid overtime to worry about. The odds are on your side, and you can be as flexible as you can be towards your working hours without thinking about adding more extra hours.

And all of this is possible with Barista FIRE.

Cons Of Barista FIRE

With all these benefits, are there still risks inherent with Barista FIRE? Just like any other investment, Barista FIRE can be risky too. Several factors need to align so it will work towards your ultimate goal. An important thing to consider is that you need to put in the hours to work to earn the needed income for your plan effectively. This means you need to be frugal and efficient in terms of your time and spending habits. These are necessary cons for your goals to be realized.

Slows Down Your Financial Independence

Barista FIRE may slow down your financial independence for a while, especially if you are not working a full-time job. Thus, it may take a bit to achieve that financial goal. But looking at the bigger picture, it will because it will effectively be adding more income to your bank account. Working on a high-income skill and adding more to your investments means more money. And this will contribute to your overall financial goals in the long run.

You may also invest in stocks, bonds, or ETFs to add up to your income. In addition, try M1 Finance for your investment needs. Check our full M1 Finance review for more details.

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Healthcare Issue

Some companies do not provide healthcare for part-timers, so this can be an issue. It can greatly affect your finances if you get sick and can’t work. Further, when you get ill and need medical attention or medicines, you need to tap into your monthly budget to address this need. This can effectively change your budget and expenses unless you make the necessary plans and include them in your budget.

The Need To Work And Invest More

Pursuing Barista FIRE requires you to work more for longer years to achieve that financial freedom. Adding more side gigs will and can add up to your savings. Thus, creating a budget that works for you can be of great help as this will help you track expenses and cut down those terrible money habits. Sometimes, living stingy can help you save more.

Barista FIRE is achievable if you will start early. You can experience financial independence earlier than the average retirement age of 65.

Calculate Your Barista FIRE Number

When calculating your Barista FIRE number, you will have to:

• Determine your annual cost of living; by doing this, you will have to calculate your monthly expenses by multiplying by 12.
• Estimate the annual earnings that you will receive from your part-time job or business.
• Subtract your part-time job wages from the yearly expenses.
• Your total Barista FIRE number is 25x that amount.

The lower your investment numbers are, the more likely you will have to make up for your supplemental income, whether working more hours or getting higher-paying jobs.

[Related Read: What Is Your FI Number – How Much Money Do You Need]

Best Barista FIRE Jobs For You

You’re all set to begin your Barista FIRE plan, and that means looking for the best Barista FIRE jobs to help you reach your goal of independently wealthy so you can retire earlier. Here are several positions to choose from.

1. Freelancing – Being a freelancer, you can be flexible with your working hours, and it’s a stress-free state with a lot of job opportunities waiting for you. You may check Upwork, Craigslist, or Fiverr for your freelancing needs.
2. Online Teaching – Be an online tutor with just an easy step; you can get your TEFL or Teaching English as a Foreign Language certificate through an online course; once you attain that one, you can teach English to students worldwide. Online teaching also has more flexible hours and rates; you also get to choose students within your favorable time zones.
3. Be A Barista – As much as the title is set, you can become a barista to earn and reach Barista FIRE. As a coffee lover, being a barista is one of my dream jobs; you get to make your own coffee. There is no need to wait in line just to get a coffee or get up in the morning cranky. Make use of your passion and use it to make money and retire early.
4. Seasonal jobs – There are particular holidays in a year when some employers demand seasonal workers. During this time, you can work part-time and earn more income to add to your savings. We have compiled a list of 11 seasonal jobs you can choose from
5. Virtual Assistant jobs – For tech or digital savvy, you can hone your skills to work as a virtual assistant. There are many sites to choose from. Even those who work in the corporate world can easily switch to online jobs like data entry, content writing, graphics, video editing, or social media management. You can even join paid groups and make cash.

These are some of the Barista FIRE Jobs you can consider looking for, but that does not mean it is only limited to this. You can even start your own business or career on your own. There are many options to make money and be financially independent.

You can make money as a YouTuber or do Twitch streaming which has become popularly known to have a considerable income. You can also start your own blog, it’s easy as 1-2-3 steps, and with 15 minutes, the point is you just have to find the right job to help you realize your financial objective in paving the pathway to financial freedom.

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To Wrap It All Up – Barista FIRE

Barista FIRE is the key to becoming independently wealthy and the secret to early retirement. It may look easy, but it requires years or decades of working and a lot of money to begin. Not to mention the process of achieving it and calculation. You really should know where you are right now and what you want to be in the future so you can determine what you need to do now.

When you retire early, it’s not just about pension benefits anymore, the lump sum, 401k, social security benefits, or the excellence award for the years of service. It is more than that, more than the tax-advantaged and life insurance.

Nevertheless, Barista FIRE makes it possible to live the dream. They have enough wealth, do not work for long hours, have no unpaid overtime, have flexible working hours, and have extra time for their hobbies and passions.

This provides you with the best of times as you get to achieve what you want in life without having to give your blood and sweat too much now. All you need is dedication and diligence in what you need to do.

What are you waiting for? Join the Barista FIRE movement now and enjoy retirement life early. Live the life you always wanted, carve the path with determination, and move towards the future with satisfaction.