What is FatFIRE?

Since the early 2000s, personal finance communities everywhere have been buzzing about something called the FIRE movement. For those of you who aren’t familiar with this acronym, FIRE stands for “financially independent, retired early”. Basically, the gist is to lower your living expenses as much as possible so that you can retire at a young age (30s or 40s).

A good example is one of the most recognizable figures of the FIRE movement, Pete Adeney. Better known by his blogger name Mr. Money Mustache, Adeney was able to retire by the age of 30 through a combination of cutting his living expenses down to just $24,000 a year while simultaneously building up a nest egg of $600,000. This figure is sometimes referred to as your “FI” number because, in theory, if you applied the 4 Percent Rule, you should be able to live off of this income for the rest of your life.

While this philosophy has certainly been life-changing for many people, I’ll be honest – it initially didn’t appeal to me very much. Why? For two reasons.

• The first is that I’ve never been in a rush to declare myself “retired”. I LOVE being a nurse practitioner which is why I started my own business and still operate as one today.
• The second reason (and let’s be real) … the idea of living on such a tight budget doesn’t sound like something I’d be willing to do. While I’m all for being frugal, I’ve also been a six-figure income earner for some time now and become accustomed to being able to enjoy my money the way I want to. I’m sure my fellow nurse practitioners can also agree.

There must have been many other people in the personal finance world who thought this way because the FIRE movement has since evolved to include several new subsets – one of which is a permeation that’s caught my attention called “FatFIRE”. 

What Is FatFIRE?

FatFIRE is more or less the same basic principles as the traditional FIRE movement but scales it upward for someone who wants to enjoy a more generous lifestyle (hence the “Fat”). Rather than forcing yourself to scrape by on as minimal amount of money as possible, you can instead aim to cover a much higher amount of living expenses – many people shooting for $100,000 or more.

The trade-off, of course, is that your FI number is significantly higher. Again, using the 4 Percent Rule, someone trying to achieve FatFIRE may need a nest egg of at least $100,000 / 0.04 = $2.5 million before they can consider themselves financially independent.

I believe the FatFIRE style is much more conducive to high-income earners than the traditional FIRE route. People who are already accustomed to eating good food, living in a nice house, traveling, and being charitable with their money don’t exactly want to give all of that up just to declare themselves financially independent. 

With FatFIRE, they don’t have to. They can have their cake and eat it too. This is because the FatFIRE strategy does a better job of striking a balance between striving for FI and enjoying your income. It does this by prioritizing the build-up of a robust net worth rather than trying to quit your job as soon as possible. It also leverages good financial principles that I’ve already been using and preaching for years (even before FIRE was a thing). 

FatFIRE Principles

Achieving FatFIRE comes down to essentially four basic rules. 

Embrace Your Career

One of the aspects I really like about FatFIRE is how it leverages your earning potential. Whereas many people in the FIRE movement can’t wait to leave jobs that they perceive to be unfulfilling, FatFIRE is all about embracing them. You’re encouraged to work as hard as you can and hustle to make as much money as possible – even if that means going into business for yourself. I can personally say that my finances would never have gotten to where they are today if I hadn’t done this and demanded more from myself.

Save Aggressively

No matter what your financial goals are, it’s going to be very difficult to grow your net worth if you’re not always saving a decent portion of your money. I’ve always advocated bucking the conventional advice of saving 10 percent and instead say to shoot for 20, 30, or even 50 percent if you can. The sooner you start doing this, the more you’ll be able to invest for the future.

Grow Your Net Worth with High-Quality Investments

Nothing amplifies your net worth quite as much as taking your savings and putting them into assets that produce consistent returns each year. These might be things like:

• Securities (ETFs, index funds, dividend stocks, etc.)
• Real estate (rental properties, REITs, etc.)
• Intellectual property (businesses, blogs, eBooks, e-courses, etc.)

The idea is that the more of these assets you have working for you, the more they can compound and generate even greater returns. I say “high quality” because you want assets that will be there when you need them. While everyone else is wasting their money on the NFT craze or some other fly-by-night scheme, stick to investments that are legit and proven to be high performers.

Mind Your Expenses

Yes, I know I said Fat FIRE was all about enjoying an above-average lifestyle. But let’s be real – even millionaires CAN’T buy everything they want. That’s the kind of mindset that takes high-paid actors and athletes and makes them go bankrupt after a few short years. We all have to be mindful to some degree of how much money we’re spending and what we’re spending it on. FatFIRE, regular FIRE, or no FIRE at all, this will always be true of your finances. 

Could FatFIRE Be For You?

The one part of the FIRE movement that I can appreciate is the FI attribute. No matter who you are or how much money you earn, the goal of eventually becoming financially independent should be a priority. Virtually everyone could benefit from having enough financial assets to sustain their way of life forever.That’s what I find especially unique about the Fat FIRE approach. I’ve always been the type of person who’s not afraid to roll up my sleeves and put in the work that’s needed to make tomorrow better.

And from the comments and discussions I’ve had with my audience, I don’t think that you’re opposed to it either.FatFIRE rewards your ambition by setting you up to sustain your generous lifestyle into the foreseeable future. It provides an edge for being a planner and proactive about multiplying your net worth. It also gives you the freedom to live the way you want to without having to make major adjustments just for the sake of being able to say, “I’ve reached FI.”

If you’re interested in learning more about how to get more out of your career, earn better returns on your investments, and expand your net worth, then keep checking back in. I’ve got plenty more on these topics to come.