If you are here then you probably know what FIRE (Financial Independence Retire Early) is, but what is “barista FIRE”? I only recently heard of Barista FIRE myself, and I had to do the research to find out what it is. Surprisingly, it has less to do with serving coffee than you would think. I think that Barista FIRE can be a good goal for a lot of people in the FIRE community.
Barista FIRE is a subset of FIRE where you still rely on part-time work for some of your income. It derives from an example of someone working part-time at an easy job such as a barista. Since you are working part-time, you do not need to have nearly as much in assets as you would with traditional FIRE. If you are frugal enough, then your part-time work could be enough for you to live on, and your assets could continue to grow on their own. There are many benefits to pursuing barista FIRE instead of traditional FIRE that you might want to consider.
What Are The Benefits Of Barista FIRE Over Traditional FIRE?
You Don’t Have To Save As Much
As you may know already, with traditional FIRE you need to accumulate enough in assets in order to replace your expenses while still utilizing the 4% safe withdrawal rate. With Barista FIRE you only need to have enough in investments to cover a portion of your expenses. Part of your income will come from part-time work.
You Can “Retire” Faster
As a result of not having to accumulate as much in investments, you can “retire” much faster than with traditional financial independence. You will be retiring from full-time work or a very stressful job. It is amazing to see what happens to your happiness when you go from working 50+ hours per week to working only 20 hours per week. I got to experience this once in my life and so I can personally attest to how much happier you could be using that extra time for things you enjoy.
You Still Have Much More Control Over Your Time
When you are not completely reliant on work income, it is amazing how much more confident you can be, or how much leverage you have in the workplace. The odds are in your favor, and because of it, you can negotiate more flexible hours at your part-time workplace. You could also switch careers easily with little to no fear because you are only working part-time and that level of income is easily replaceable. If you were previously working 40 or more hours per week and now only work 20, then that is an extra 20+ hours at your disposal. FIRE is all about being in control of your time, and Barista FIRE is a subset that offers this as well.
You Can Work On What You Are Passionate About
How about instead of working at a high paying job that you hate and that sucks all of the life energy out of you every day of the week you instead begin working on something that you actually enjoy. Have you ever heard that quote “Choose a job you love, and you will never have to work a day in your life.”? Well, it could have some merit to it. Instead of being stuck in a dark cubicle for 10 hours a day, you could spend 5 hours a day assisting teachers with special needs children. Instead of boring pointless corporate meetings, you could be coaching a little league team all season long. Instead of reporting to your board of directors you could be reporting to the group of vacationers that you are about to take kayaking for their very first time. I think you get it, Barista FIRE allows you the opportunity to pursue a job you actually enjoy in a relatively short amount of time.
How Much Money Do You Need To Barista FIRE?
Just like with traditional FIRE, it depends on how much your part-time work pays, and what your expenses are. Some part-time jobs can pay nearly as much as full-time jobs, it all depends on what you want to do if you Barista FIRE.
You still want to utilize the 4% rule with your assets. If you have $500,000 in assets, then you should take no more than $20,000 from it per year. The remainder of your budget is met by your part-time work. If you made just $10,000 from your part-time work then you would have a total of $30,000 per year to spend. That is a monthly budget of $2,500, which I think is realistic if you live optimally in a lower cost of living area. All the while only having to work a fraction of what you used to.
Here is an example of someone who is Barista FIRE: This individual has accumulated $400,000 over the past couple of years thanks to optimizing their lifestyle and living on only less than half of the income from their high paying, but stressful job. They cannot take it anymore, they realize that the money that they make is not worth the stress and hours that it takes to get it. They decide to quit their job and move to a lower cost of living area. They get a part-time job as a basketball coach at the local middle school down the street from where they now live. The job only averages 4 hours per day after school hours but pays a $2,000 stipend per month for the 10 months that school is in session. That adds up to $20,000 per year in income from work that the individual is passionate about. Utilizing the 4% safe withdrawal rate on their $400,000 in investments also yields an additional $16,000 per year for a total of $36,000 per year to spend.
Does that hypothetical situation sound any good to you? They only had to accumulate $400,000 in investments, which is not all that difficult. If our individual wanted to shoot for traditional FIRE then they would need about $900,000 to cover $36,000 in annual spending. That is double what they currently had saved. What a huge difference barista FIRE offers.
Why You Should Pursue Barista FIRE (Maybe)
If You Still Want To Work, But Want More Free Time
Barista FIRE might be right for you if you want more free time, but you still want to do some kind of work. It might be right for you if you like the structure of regular employment, but want something that is less stressful and requires less commitment than your current job. When you Barista FIRE, your salary is not really important to you. You are not completely reliant on that salary to live, it is just a supplement to your income.
If You Want To Pursue Your Passion In A Lower Paying Job
Filling your time with something you enjoy doing is a win. If you are getting paid a little for doing it, then it’s a win-win right? Barista FIRE offers you this opportunity. It doesn’t even have to be just part-time work that you are limited to. Maybe a full-time schedule consisting of one of your passions is what you want, and that is okay. Your income could replace the need to withdrawal from your assets, and they could potentially grow and grow all the while you are immersed in work that you actually enjoy doing.
If You Want Some Of The Benefits Of Some Part-Time Jobs
Starbucks is well known for offering generous benefits, even to part-time workers. This is part of what barista FIRE so powerful. If you can get good medical insurance, dental insurance, life insurance, 401k, paid vacation, tuition reimbursement, perks, etc. while only working part-time, the full-time benefits could be worth it to you. It is a well-known fact that medical insurance is very expensive and often a struggle for those seeking traditional FIRE. Barista FIRE offers an easy clear cut way to benefits at some part-time jobs.
If You Still Want To Pursue Traditional FIRE, But At A Slower Pace
Just because you have chosen Barista FIRE does not mean that you have to give up on traditional FIRE all together. If your part-time or passion work generates enough income to not need to withdraw the full 4% of your assets every year, then your assets could keep growing over the years until it compounds into a number that has the potential to replace all of your spending needs. If you decide to follow this path it will be slower than making additional contributions to your investments like you do during traditional FIRE, but the point is that it is possible to still reach traditional financial independence in the future.
I can really see the appeal of what Barista FIRE represents. Barista FIRE can be just as good as traditional FIRE if you do it for the right reasons. At the end of the day, those of us pursuing financial independence are doing so in order to be happy. You do not have to be completely Financially Independent to be happy, and that is what Barista FIRE shows us. There are benefits and drawbacks to deciding whether traditional FIRE or barista FIRE fits you better but only you can decide which is right for you.