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Do you know what FIRE (Financial Independence Retire Early) movement is? Some people consider this an overhyped approach while others find it a new strategy to achieve happy early retirement.
This growing trend is becoming popular among young people looking to achieve financial freedom and retire at a younger age. However, how widespread are knowledge and usage of the FIRE principles?
Therefore, EduBirdie surveyed students to see what they actually think about FIRE. We asked if they knew the approach and if they could save money following the rules. We wondered about financial plans for 2023 and perspectives on financial independence. Young people also revealed what they would sacrifice to retire early.
Read on to discover the insights we uncovered.
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Respondents
First, let us look at the people we talked to.
1000 participants
Our study involved 1000 full-time and part-time students from the U.S.: an equal number of men and women aged 18-44. Ethnicity and spoken languages were not considered factors of differentiation.
2 groups
There were two groups: students who were into FIRE and students who were not. We interviewed both groups. But let's take it one step at a time 😉
NB! You may see the results as decimal numbers.
We allowed several answer options, so the numbers are not integers.
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Knowledge of the FIRE principles
We identified that most surveyed students know and practice the FIRE approach.
Yes, I know what the FIRE movement is, and I am actively into it
Yes, I know what the FIRE movement is, but I am still learning where to start
Yes, I know what the FIRE movement is, but I don't like this approach
No, I don’t know what the FIRE movement is
No, I don’t know the FIRE movement, but I've googled it and got the idea. I also would love to retire early
Not surprisingly, most people aware of this approach are the youngest students surveyed, aged 18-24.
50% are already learning to take the first steps in the FIRE.
The majority of students learned about the FIRE movement from friends or TikTok and at school.
TikTok
26.53%
Friends
🙌
27.21%
Celebrities
🌟
11.56%
School
🎓
17.69%
Media outlets
📣
16.33%
Family
👨👩👦
0.68%
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The FIRE strategies students choose
The FIRE strategies students choose
Stick to a retirement savings plan, such as a 401(k) or 403(b)
Making more money
Cutting expenses
Stick to a retirement savings plan, such as a 457(b)
Contributing to a health savings account (HSA)
Shopping for stocks and shares ISA
Contributing to a Roth IRA
Interestingly, no respondents suppose investing in the stock market through funds, bonds, or shares in individual companies might be relevant regarding FIRE.
When broken down by age, respondents in the 18-24 and 25-34 age groups picked earning more money, while 35-44 year-olds identified 401(k) or 403(b) as the most relevant options.
Budgeting is back on the table! Especially given the crazy cost of living and the financial stress it causes. Yet, most student survey participants have been saving money for a while.
Less than a year
18.31%
Slightly over a year
26.76%
Two to five years
39.44%
More than five years
15.49%
Among those who saved from 2 to 5 years, we noticed that there are more ● women than ● men.
39.29%
60.71%
So we went deeper to check for any difference in saving patterns regarding gender and age. We found out that among those 18-24 year-olds who save from 2 to 5 years
83.33% are females
16.67% are males
Money that students can set aside each month
Up to 10% of income
26.76%
11 to 20% of income
30.99%
21 to 50% of income
32.39%
51 to 70% of income
7.04%
Over 70% of income
2.82%
We decided to check if there was a difference in how much money male and female students saved. Consequently, we categorized the received responses by gender.
30.56% of male respondents, which makes a majority, say to save up to 20% of their income monthly.
34.29% of female students, which is a majority, say to set aside up to 50% of their income monthly.
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Most common while unexpected sacrifices to enjoy early retirement
What to sacrifice to enjoy early retirement?
Everything has a price, including both retirement at 50 and the opportunity to do anything. Students who are actively into the FIRE or those considering it are ready to sacrifice:
21.92%
A dream job for a high-paying job they don't like
19.18%
Vehicle purchase
17.81%
Traveling
Breaking by age,
30%
of students aged 18-24 would better not have kids to retire early.
Where did into-the-FIRE students learn to do personal finance?
Personal finance courses
Personal finance books
Personal finance class in high school
Blogs
Interviews with financial and money experts
Money tools
Joining a network of financial professionals
However, there is no one-size-fits-all approach. Some people find FIRE FOMO demotivating, some need more time to reduce expenses significantly, and others believe it only works for those with families, children, and ongoing routine costs.
We also surveyed those students being out-the-FIRE movement. Let's glimpse at their viewpoints.
Let’s roll back to the fact that 15% of the surveyed students don't know about FIRE, and 14% don't think this approach is valid.
Meanwhile, 72.41% of them still know people saving to retire early.
72.41% have a savings goal for this year.
75% of 18-24-year-olds, 80% of 35-44-year-olds, and 63.64% of 25-34-year-olds students have a certain saving plan.
Their main financial goals for the nearest future are:
Making a budget
26.87%
Starting an emergency fund
14.93%
Paying off the car
13.43%
Doing something fun for themselves
13.43%
Starting a business
11.94%
Paying off credit card debt
10.45%
Saving for college
8.96%
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Expenses that students are cutting
Scaling back on expenses
All surveyed students showed they are ready to "tighten their belts" and decrease spending.
The survey reveals that cutting back on going out, shopping, traveling, subscriptions, and eating out are the top ways all recorded students save money.
Despite looking for ways to save money, students indicated they are unwilling to cut expenses in certain areas. Specifically, survey respondents stated they would not be willing to compromise on expenses related to cellphone service, renting/housing, internet, insurance, and cable.
Notably, most 18-24 and 35-44-year-olds are willing to reduce their spending on social 👋 🥂 activities, while 25-34 year-olds are likelier to limit travel ✈️ 🌍 expenses.
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Alternative ways to save money
Alternative and yet creative ways to decrease spending included:
Couponing and deal hunting
13.51%
Saving hobbies (cooking, gardening)
12.01%
Staying sober
10.81%
Quit smoking
9.61%
Moving to a cheaper apartment
9.31%
Living with family
8.41%
Riding a bike, not driving
8.41%
Learning how to sew clothes myself
7.21%
Eating less
6.91%
Taking shorter showers
6.61%
Prefer candles to lamps
5.41%
Moving in with friends
1.80%
71.00% of all respondents say growing income is more important than cutting off expenses.
They were also asked what financial independence meant for them. Here are the results:
Being able to pay my bills
18.71%
Living life without limitations
14.91%
Paying down all of my debts
14.33%
Having money leftover
13.74%
Being able to buy everything I want
10.82%
Establishing independence from my parents
10.23%
Buying property
9.94%
Retiring really early
7.31%
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What worries them most about finances
Financial insecurity is becoming a growing concern. Among the things disturbing students, the following ones take the lion’s share:
Rent
18.15%
Gas prices
13.90%
Health and medical issues
13.13%
Student loans
12.74%
Loss of work
11.97%
Low savings
11.97%
Child care
7.72%
Long-term unemployment
7.34%
Nothing
3.09%
Financial stress among students can significantly impact their academic performance, personal life, and mental health. According to our survey, the most common effects of financial stress students have ever experienced are:
Anxiety and depression
23.68%
Sleep problems
19.30%
Mood swings
17.54%
Feelings of fatigue
15.79%
Difficulty concentrating
14.91%
Withdrawing from others
7.46%
Only 1.32%
of the respondents have not experienced the harmful effects of financial stress.
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