Hello again dear reader. Have I told you lately how much I appreciate that people like you take the time to read my blog? I’ve been doing this blog thing for just about a year and it still blows my mind that people come back to read my stuff. I am grateful and humbled to be able to share my story about how the FIRE movement (financial independence retire early) changed my life.

Reflecting back on my writings so far, I feel like I could do a better job explaining the basics behind financial independence (FI). If you truly want to join me on this journey, you will need to learn about the basic principles and tactics needed to achieve financial independence.

What is Financial Independence?

“Financial independence means you have enough wealth to live on without working”


Financial independence is a state where you have enough wealth that you do not have to worry about working. Key to financial independence is your asset portfolio. What is an asset portfolio? Your portfolio is a collection of appreciating and/or cash flow positive producing assets (e.g. stocks, bonds, real estate, business, etc.) that you purchase with your savings. Whether you know it or not, we are all in the asset collection business. When your portfolio begins to produce enough money/income every year that it is equal to or greater than your annual costs of living, then you are financially independent!

Portfolio Income ≥ Expenses = Financial Independence!

Got it? Ok good.

FI vs FIRE Movement

So now that you understand what financial independence means, it is important to know that you don’t have to do it alone. In fact there is a relatively unknown movement focused on building community, and supporting each other to get to financial independence as fast as possible. This is commonly known as the Financial Independence (FI) Movement. Within the FI Movement there is an even more niche sub culture called the Financial Independence Retire Early (FIRE) Movement. I’ve provided a brief definition below that explains the difference between FI and FIRE:

The FI Movement (click me)

The FI movement is a sub-culture of the personal finance community focused on achieving financial independence in the most efficient way possible. Their goal is to live modestly in order to create savings. They then take that savings and invest in cash producing/appreciating assets. Their goal is to build their portfolio and achieve financial independence as fast as possible.

FIRE Movement (click me)

As the name suggests people in the FIRE movement want to reach financial independence, but the whole goal is to reach FI and retire early from regular 9-5 work. That means if they are FI at 35, they can leave their job to pursue other more important things or more meaningful work, without having to worry about paying the bills. These folks are a bit more intense and I include myself as one of them.

The key takeaway is that there is a diverse and wonderful community out there looking to buck the trend of the mainstream approach to working for 45 years and retiring gently into the night. Our path to FI is unorthodox, radical and is the one less traveled.

Speaking of Unorthodox

Ok, so you now know the subtle nuances behind the FI Movement and the crazy FIRE people who haunt the internet with their dream of early retirement. Now what? What exactly does the path to FI look like? Where the heck doe you start? Hey I feel yah. I had the exact same questions. Here’s what I discovered.

FI Principles & Tactics

The FI movement at first seems complex and can be super intimidating. But don’t get tripped up on the hype. The principles and tactics behind the movement are relatively simple and easy to understand. This is a good thing for me, because I’m no financial genius, and simplicity makes it possible for everyone to at least try to reach financial independence. The foundation of the FI movement can be summarized into 4 basic principles:

Principle 1: Be Purposefully Frugal

In the FI movement frugality is a key principle, but being frugal for its own sake lacks purpose. Instead frugality is a principle and technique used to build up wealth, avoid debt (AKA the wealth killer) and prevent lifestyle inflation ( AKA keeping up with the Joneses).

Frugality: The economical use or expenditure of resources; prudently saving or sparing; not wasteful

Below are some popular frugal tactics you can start doing tomorrow:

Live Simply (click me)

Our economy is driven by consumerism and the world is always trying to sell you something. What’s counter-cultural about FI/FIRE is that their frugality has led them to live a focus on a more simple and fulfilled life. That includes not spending money on stuff that really doesn’t matter. A great tactic is to go through your existing stuff and question why you have it. If it has no function or purpose, you may be better off getting rid of it or better yet selling it for someone else to enjoy.

Buy Used (click me)

If you do need to make a purchase, a great way to save money is to consider buying used. This includes all major purchases such as vehicles, tools, furniture or smaller consumer items like clothing. If you need to spend, think strategically by checking sites like or craigslist.

Be Content (click me)

The biggest challenge I find when it comes to finances is the ability to be content with what you have and where you are at in life. We all fall for the trap of comparing ourselves to others and trying to keep up with the Jonses. The marketing world is constantly bombarding us with messages that we are not good enough or if we buy that home or get that car or buy those clothes, our lives will be so much better. On my path to FI, I’ve been forced to do some self-reflection on who I am, my values and how to align my spending with what I truly believe and care about.

Principle 2: Create The Gap

Another key principle is called creating the gap. This principle is based on creating a significant difference between your income and you expenses. The wider the gap the more you can save. When you explore other FI sites you may also hear the term savings rate. This is a simple measure of the percentage of your income you are able to save and build your wealth.

Below are some key things you need to do to create the gap:

Budget (click me)

You can’t create “The Gap” without knowing where you money is coming from and where it is going. In order to do this, you will need to create yourself a budget and stick to it. Though most bloggers make budgeting sounds easy, it isn’t. Especially if you have a modest income. Don’t be surprised if you struggle with sticking to your budget and even hate the process. It’s the least favourite part of my FI journey, but it is the most powerful tactic in my FI toolbox.

Increase Income (click me)

Increasing you income can be a powerful tool in creating that gap. In some cases it can be relatively easy. For example, getting a cost of living pay raise or getting an annual bonus. Other times it will take some real effort – getting more training/education, applying for a better paying job, renting out a room in your home, or a side hustle. When you do bring in more income, DO NOT SPEND IT! Instead maintain your current expenses and put that extra cash towards your savings.

Decrease Expenses (click me)

The toughest part of budgeting is being able to control and reduce your expenses. The three biggest costs to anyone’s budget is food, housing and utilities. You can counter these costs by eating out less, taking a lunch to work, living in a smaller home (if possible) and installing energy efficient systems in your home. You will need to put some serious thought into this and create a plan that fits your needs.

Principle 3: Invest Your Savings

I’ve saved the best for last (see what I did there? #DadJoke). If you apply the previously mentioned principles and tactics, you should have money left over every month. It is important to understand that all investments are based on people’s savings. When you hear about someone having money to invest in the market, it is the result of them creating a gap and having a good savings rate. It cannot be done any other way. For the FI movement it is not unusual to hear people plowing 30% or more of their income into their investment savings. Below are some common tactics and places to put your savings:

Emergency Fund (click me)

When first starting out, it’s important to put money aside just in case there is an emergency.For many Canadians a setback or emergency of $200 can be financially devastating. Setting aside between $1,000 and $2,000 has helped us along the way. This past year we had a couple car issues and it was good to have cash on hand to deal with it.

6 Months of Living Expenses (click me)

Life happens and for many of us we may find ourselves let go, in between jobs or face a major health issue. Knowing this, it is important to put away money for such a situation. In the FI/FIRE community the common rule is setting aside enough money to cover 6 months of expenses. This is a daunting task, but remember it doesn’t have to happen right away. Give yourself a few years to build it up.

Collect Those Assets! (click me)

After you have saved up for an emergency and six months worth of living expenses, you can move into building your investment portfolio. Your investment portfolio can be made up of stocks, bonds, real estate, etc. One very popular investment vehicle are low cost index funds.

Automate Your Savings (click me)

Once you get a handle on your budget and create a big enough gap, it will be important that you automate your savings. What that means is that every time you receive your income into your bank account, you automatically take a set amount and put it towards your savings. When you reach this stage, you will be ahead of about 90% of the population.

Simple ≠ Easy

There you have it. The principles of FI/FIRE movement in a nutshell. You can take heart that the path to financial independence does not have to be complicated. The simple principles and tactics can be done by anyone. But, just because it is simple, it doesn’t mean it is easy. That’s why I’ve joined the FIRE community; to gain knowledge, support and information to help me on my path.

Don’t be afraid to start your journey today. You may feel like to you don’t know enough. But, we all start from a place of ignorance and fear. What’s important is that we aren’t driven by our fear and insecurities. Instead, we need to take steps to move out of ignorance and into enlightenment.

All the best,

Mr. Prairie FIRE