Over the past few months, I’ve been carefully mapping out my path to Financial Independence and Retiring Early (FIRE). While being cautious has its merits, I realized I might have been too conservative in my estimates.
That’s when I discovered Barista FIRE, a flexible approach where you achieve partial financial independence but continue working in a lower-stress or part-time role to cover some living expenses while letting your investments grow. This way, you don’t need a full retirement nest egg upfront.
My Barista FIRE Calculations
- Monthly Expenses (including spouse): ~5,000 SGD
- Annual Expenses: 5,000 x 12 = 60,000 SGD
- Expected Side Income (from part-time work or projects): ~25,000 SGD/year
- Annual Passive Income Needed: 60,000 – 25,000 = 35,000 SGD
My current investment portfolio yields around 8% (thanks to buying stocks during market downturns), but I expect this to stabilize at ~5% as I diversify further. To generate 35,000 SGD/year at a 5% yield, I’d need a portfolio of ~700,000 SGD.
Given my current trajectory, this is achievable within the next 3-5 years, meaning I could transition to Barista FIRE much sooner than I initially thought!
Why Barista FIRE Works for Me Now
While the ultimate goal is full FIRE, Barista FIRE is a more feasible and mentally sustainable step for me. The truth is, I’d go crazy without some structure and people to interact with. Continuing part-time or project work keeps me engaged while reducing financial pressure.
Interestingly, by the time I fully retire (when I eventually stop even side gigs), my expenses may actually decrease as I would probably be old by then. With less active work, I’ll likely spend less on commuting, work-related costs, and discretionary spending tied to a busier lifestyle.
Long-Term Sustainability
Barista FIRE allows for an earlier exit from the traditional 9-to-5 grind, but it’s not a permanent solution. Eventually, age or changing circumstances may require full retirement. So, even after reaching this milestone, I’ll keep growing my investments to ensure complete financial independence down the road.
For now, the idea of working on my own terms while covering basic expenses is an exciting and realistic goal, one that’s closer than I imagined!
Nonetheless, plan do keep changing and hence the best thing to do now is to continue building my little portfolio.
In 2022 I was working in a job I disliked, portfolio was about SGD840k and i also had 60k more in cash. I then switched careers to join a startup for less pay, but full freedom (fully remote, work from anywhere etc). My portfolio is currently at SGD 1.17 million. At the time I quit the high paid job, my investment already was compounding at a nice rate, typically at this stage market movements outpace own contributions. I have not withdrawn from the portfolio, but reduced the savings rate dramatically.
ReplyDeleteSo I would say, from my perspective, Barista FIRE works. Some things to watch out for in your plan: you will want to adjust your withdrawals year by year for inflation. This is not sustainable on 5%. 4% is more realistic. Lower paid jobs do not necessarily suck less than high paid jobs and are not relaxing. I have no idea, who coined the term "Barista" FIRE. Being a barista is high stress, repetitive, you have to stand all day and deal with annoying customers and at the end of the shift you have earned less than in one hour sitting at the computer in the comfy office.
My recommendation would be to diversify while still in the main job, make contacts for lucrative side gigs later, build specialized skills etc. I see too many "consultants" which are mostly people who got retrenched in their fifties. Best to build the new life from the comfort of your old job.
Good luck!
Yes, i agree Barista is a difficult job too! Yeah staying in main job till side gig takes flight ✈️
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