Educate yourself    

To obtain FIRE at any age, you will need to educate yourself. In this post, my goal is not to attempt to educate you on all things related to money and finance. Instead, my objective is to open your eyes to just how much there is to learn. From there, you will develop an idea of the importance and overall impact certain topics have on your financial life and path to FIRE. Finally, I will point you in the right direction for other resources (some I developed in addition to other good sites and tools out there). Let’s dig in on the Educate step on your path to FIRE.

As a bit of a brain dump, are you familiar with income, expenses, net worth, compounding interest, time value of money, 401ks, IRAs, maximum contribution limits, stocks, brokerage accounts, and fees? If not, no worries. We can address those in time. How about budgeting? Do you have a budget and is it updated regularly? We’ll dig into budgets specifically in the Plan step of the steps to FIRE but you will need to educate yourself on the basics of a budget before we get there.

In an

attempt to help, I would encourage you to break concepts down into buckets to help focus. This will reduce the likelihood of getting overwhelmed – not a place you want to find yourself. If you do start to get overwhelmed, take a break, slow down, and reach out for help. This is critical. So many people that get overwhelmed give up. By giving up, they will never reach FIRE and unfortunately, many will fall victim to the same nasty debt cycle so many live within. Stay with it and work to educate yourself.

basic building blocks

Here are

some tips I found to be helpful when I set out on my path to FIRE.

  1. Learn the basics first – by this I mean the following topics specifically:
    1. Income
    2. Expenses
    3. Net worth
    4. Budgets
    5. Debt
    6. Interest
    7. Assets
    8. Liabilities
  2. Slowly progress to the more complicated but highly impactful topics. These include:
    1. Compounding interest
    2. Different account types (savings, checking, retirement, investment, etc.)
    3. The Rule of 72
  3. Find resources that support constant exposure to topics and education. To do this:
    1. Listen to my podcast on a regular basis
    2. Join the FIRE community on Twitter
    3. Read the Business section in the Wall Street Journal (I do daily)
    4. Check out sites like Yahoo Finance, CNN Business, or Fox Business regularly
  4. Learn the difference between cheap and frugal
    1. Being frugal and spending wisely will help you reach FIRE. Being cheap may end up costing you more in the long run

Remember

it will take time to educate yourself on money and finance related topics. This education helps you better understand and then define your specific path to FIRE. The educate piece could take a couple of days or a couple of months. It’s really up to you. I suppose more importantly, once you have the foundation on the education piece, the learning really never stops. I am constantly looking for new information, tips, and strategies that will help me financially.

Ok, with the specific topics above covered and a solid few regular resources by your side to reference, it’s time to take a look at the second step that has done me well in my pursuit of FIRE. Planning.

Or, head back to the all Six Steps.