The brilliant pyramid outlines the 6 steps to
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Hierarchy of FIRE (Financially Independent and Retired Early) 1. Surviving 2. De-debting 3. Learning 4. Investing 5. Optimizing 6. Freeing
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- 1. The brilliant pyramid outlines the 6 steps to financial success MASLOW'S HIERARCHY OF NEEDS IN FINANCIAL TERMS
- 2. Maslow's hierarchy of needs
- 3. Hierarchy of FIRE (Financially Independent and Retired Early)
- 4. Hierarchy of FIRE (Financially Independent and Retired Early) The financial blogger known only as Mister Squirrel (who has since closed his site) shared his own version of Maslow's hierarchy: the path to financial success. Squirrel, who "dreams of a non-corporate life," calls his theory the Hierarchy of FIRE (Financially Independent and Retired Early). The idea is that once you're operating in the highest tier with your money, you're set up to be a financial success and that applies whether or not you're aiming for early retirement.
- 5. Hierarchy of FIRE (Financially Independent and Retired Early) 1. Surviving. Before anything else, we have to get our minds right when it comes to money. As Squirrel puts it, "If you think that the government will look after you, money will take care of itself, or youll win the lottery, then youre not thinking about money correctly." In this stage, you'll also start living below your means, and spending less than your monthly income. 2. De-debting. While everyone's debt situation is different, ridding yourself of "bad debt," (the kind that costs you money without giving you any clear value in return, like credit card debt) needs to be checked off your list before you can make real progress. 3. Learning. This is where you set aside an emergency fund to keep you in the green should something go wrong, and where you start learning about the possibilities for your money. Which accounts should you use? Should you invest, and how? If you have a question, now is the time to find an answer. Luckily, you have the entire internet at your fingertips. 4. Investing. Time to make use of those answers. Squirrel points out that this stage doesn't have hard borders it will continue on through the pyramid's last stages. 5. Optimizing. Now that you have your answers and have gotten your money in order, it's time to start tweaking your plan to perfection: Plan for taxes, get a will, create a system to check on your money. 6. Freeing. "When you get to this stage," Squirrel writes, "you should be 'there.'" Now that you're financially independent and perhaps have even retired early, you have predictable expenses easily covered by passive income streams.