Frum FIRE

What is FIRE and why is it not more popular in Jewish circles?

Next week is the Jewish holiday of Pesach, Passover, the holiday of freedom. I’d like to talk about financial freedom for your family. Some readers might wonder why a newsletter about family would cover topics in personal finance at all. The reason is simple: To create a vision for your family, money necessarily comes into the picture. Whether we are talking about taking a blow-out vacation designed for family togetherness or a goal as involved as creating a family legacy, money is a make-or-break part of that conversation. While money is not a goal we should chase for its own sake, it has the potential to transform our lives and the lives of those around us for the good if we harness its power correctly.

Pesach is an expensive holiday, whether you’re going on a program or making Pesach at home, the time is ripe for considering how your family life could change by being more intentional with money. 

Financial freedom and the FIRE movement can be inspiring. It has been animating for me and my husband, and we’ve put many FIRE principles into place. It has given us language for some of our plans, inspiration, and so much additional knowledge. I hope it will do the same for you. Even if you’re not ready to jump into this process with both feet, I suggest that you think about it seriously; turn the idea over in your mind; talk about it with your partner. 

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Consider what your life would be like if you didn’t have to work. Would you spend more time with loved ones, learn more, explore the world, acquire new skills, or pursue a passion-driven career change? All of those? 

Seeking ways to live a purposeful life without being beholden to a job is the raison d'etre of the FIRE movement. FIRE stands for "Financial Independence Retire Early." Each word deserves its own lengthy treatment. 

Intriguingly, while the FIRE movement has gained traction elsewhere, with few exceptions, it hasn't found resonance in the observant Jewish world. Despite the significant wealth in some of our Orthodox communities, the adoption of the FIRE framework has been limited.

I think this is a mistake.

Let’s explore some basic definitions and concepts and then talk about why more family-oriented Jews should consider pursuing FIRE.

Financial Independence

In the FIRE movement, “Financial Independence” means that an individual or a household has accumulated sufficient resources to cover living expenses and sustain their desired lifestyle without relying on traditional employment. Financial independence can be achieved in a number of ways - most commonly by investing in the stock market or buying real estate. There are many resources out there for those interested - Mr. Money Mustache was one of the first and continues to be quite comprehensive and accessible, and Choose FI is a podcast and websites that houses many FIRE resources and success stories online. 

Let’s look at a few examples. Say a household's annual expenses are $150,000. Assuming a conservative 4% withdrawal rate, the household would reach financial independence when they had accumulated $3,750,000 in market investments. 

As we all know, the market goes up and down, but assuming a 7% annual growth rate, if a family withdraws 4% per year, their investments would continue to grow and compound with time. 

If the family expenses were only $100,000 per year, they would need $2,500,000 in the market to be financially independent, assuming that same 4% withdrawal rate. 

To achieve financial independence, the FIRE movement promotes cutting expenses - sometimes in extreme ways - in order to be able to invest more and live on less. There are many FIRE calculators out there, each with a slightly different focus, to help you learn how much you would need to save and invest and how many years it will take you to reach your FIRE number (the amount of passive income you would need to live on, post retirement). I like this calculator because it includes real estate income. 

Retire Early

The "RE" in FIRE stands for "Retire Early," challenging traditional notions of retirement. Achieving financial independence before the conventional retirement age allows individuals to redefine retirement based on personal preferences, potentially exploring new opportunities or pursuing passions.

The RE part of FIRE sometimes attracts criticism. What does it mean to “retire”? Should retirement be a goal? Does work carry intrinsic value? Many people picture retirement as playing golf, or sitting alone in a rocking chair. But the truth is, once you’ve achieved financial independence, retirement can look like whatever you want it to look like. Some people enjoy their 9-5 jobs, and choose to stay on, but with an increased sense of confidence knowing their needs are covered. Some people get part-time jobs doing something good for the community and spend the rest of the time writing a novel. An observant family might use the time not spent at work to pick up the kids from school, lead after-school activities, start a family business, or travel the world together. The point is that when you don’t need the money, you don’t have the same pressures - you can take chances, you can take opportunities - you are not a downturn or a bad boss away from financial ruin. You get to take more control of your one precious life. 

Imagine what life would look like if you could do that at 30 or 40 or 50. 

Why FIRE in the Frum Community?

A lot of readers may be looking at me skeptically. You might be saying, “lady, I need a lot more than $150,000 annually to support a family and afford day school tuition” (maybe so,  maybe not - it all depends on your fixed expenses). Or, “I could never save upwards of a million dollars in a short amount of time” (people do it all the time, you probably can too if you’re willing to make some life adjustments). Or you might be taking issue with finer points like a 4% withdrawal rate or wondering if $100,000 is before or after taxes (substitute your preferred rate, and you should absolutely consider taxes when calculating your expenses for your FIRE number).  

While perhaps it’s not for everyone, FIRE is an impressive movement. It combines frugality with calculated investment and a drive for time-freedom - to be able to spend less time working for someone else and more time doing things that are meaningful to you. Undoubtedly, you can imagine these ideas taking shape in the Jewish context - maybe in your own life. 

So why hasn’t it caught on in the frum, religiously observant, community? I believe the resistance lies in the following three areas, 

1. Our increasing dependence on material luxuries; 

Materialism and conspicuous consumption are challenges in secular society too, and within our communities, it’s an issue many a rabbi (and podcaster) has taken on. I will eventually cover it here in more depth too. With social media and the increased material success of some members of the community, the bar keeps getting set higher to the detriment of not only those who simply cannot afford to keep up, but also those who just barely can. Many of us are guilty of confusing wants with needs and prioritizing luxuries in the moment at the expense of our families’ financial futures; 

2. Higher cost of living in Jewish communities makes saving more challenging; 

Admittedly, even without “luxuries,” the cost of living in Orthodox communities can be quite high. School, camp, kosher food, a home inside the eruv, and smachot all come with a price tag; and 

3. A simple lack of exposure. 

Most people have not learned about personal finance, formally or informally, let alone FIRE concepts. As in all things, education can inspire life-altering change. 

Recently, a few organizations and individuals have begun to fill some of the education gap by offering courses and counseling in Orthodox communities. Some organizations help people get out of debt and try to increase financial literacy for teens - both wonderful things to do. Not getting into debt and being able to afford our lifestyles are fine goals, but I wonder about their positioning. I think there is room to think more expansively about money. Wealth can do a great deal of good, and each family should have a vision when it comes to money. Increased financial literacy and goal-setting can improve our communities. Wealth can ease struggles in our own lives and the lives of those we love, and to me most importantly, it can buy our time back. If we help people create a vision for financial success - a “why” -  it makes saving and investing on a long-term basis not only easier, but fulfilling too. 

What is your “why”? To travel with family? To take professional cooking classes and open a restaurant? To make memories with your children? To renovate your synagogue and improve the community spaces? 

Do you know any frum proponents of FIRE? I know of a few, including the new nonprofit, Frum Finance, which is one to watch. If you know someone FIREing or educating about FIRE, please connect me - I’d love to talk to them.

What do you think about FIRE in the Orthodox community?

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