Barista FIRE is where the returns from your invested assets cover most, but not all of your living expenses, and you do work that you find enjoyable to make up for the difference and fund the rest of your lifestyle.
The big idea behind Barista FIRE is that by generating a relatively small amount of income on the side doing work you find enjoyable, you can dramatically reduce the net worth that you need to quit your full-time job and exit the rat race. This allows you to gain financial freedom much sooner than if you waited to reach your traditional Financial Independence / Retire Early (FIRE) milestone. While the term "Barista FIRE" comes from the friendly coffee-making profession, the ways you can make "fun money" are unlimited!.
To learn more about the details and math behind Barista FIRE, checkout my post: What is Barista FIRE? The complete guide to unlocking early financial freedom.
If you shift to Barista FIRE at age 45, then you will reach full FIRE at age 60!
If you stayed at your day job, you would reach full FIRE at age 48, which is 3 years after your Barista FIRE age.
Plan for recurring monthly income over different time periods as well as windfalls and one-time purchases in the future.
Includes 10 year Net Worth Tracker with Dashboard, Asset Rebalancing Calculator, and advanced FIRE and Coast FIRE Calculators.
I made this calculator to help you plan and visualize what your financial trajectory could look like if you took the Barista FIRE approach.
The green line on the graph represents the growth of your net worth over time with your customized inputs. The red line visualizes your full FIRE number. You reach your full FIRE point where the green line crosses the red line.
At your Barista FIRE Age, you can see a "bump" in the graph where the slope of the two curves changes. This point represents where you would quit your day job. Since you are likely bringing in less income during your Barista FIRE phase than previously, the growth of your net worth slows down since it is mostly driven by investment returns and not contributions.
The code calculates your full FIRE number as follows:
(FIRE number) = (annual spending) / SWR
This calculator uses the compound interest formula:
A = P * ( 1 + n)^t
Here A is the final amount, P is the principle (initial amount), n is the annual growth rate, and t is the time in years.
Inflation is an important variable to account for when planning for retirement decades in the future. It is almost certain that we will experience inflation in the future, and for this reason having your money invested in assets and not all stuffed under your mattress is crucially important. Assets like stocks and real estate tend to rise with inflation while cash loses value, meaning the best way to preserve your wealth in times of high inflation is to be invested in these "hard" assets.
Don't worry about inflation, it's built-in to the calculator! This calculator accounts for inflation by subtracting the inflation rate (from the input slider) from the investment growth rate of return. This gives an inflation-adjusted rate of return which is then used to calculate your Coast FIRE number and draw the graph. With this approach, all the numbers in the calculator are adjusted to be in 2020 dollars. Think about it like this - you don't have to worry about cost-of-living increases because it's already skimmed off of your expected investment returns.
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