Barista FIRE is designed to make it possible to achieve financial independence at an early age. We’ll tell you what it’s all about and explain the difference to the FIRE movement.
Do you also dream of retiring early or working less in the long term without worrying about your finances? Or have more allowance to spend on your hobbies like doing your sports betting. Then the Barista FIRE concept is definitely of interest to you. Put simply, this concept is about saving a lot of money and then switching to a more relaxed part-time job.
Barista FIRE has its origins in the FIRE movement
Barista FIRE originates from the USA. The name refers, among other things, to the social benefits of a coffee house chain. Barista FIRE emerged from the FIRE movement. The abbreviation stands for “financial independence, retire early”. In German, this means something like “early retirement through financial independence”. To achieve this goal, you need to start living frugally and saving your money at an early age – similar to frugalism. In addition, money should also be invested in order to achieve the savings goal and thus financial freedom. Many FIRE followers want to achieve this by the age of 40 or 50. To achieve this, they draw up a financial plan. They often save 50 to 70 percent of their income.
Barista FIRE is a weakened version of this principle. So that the amount of savings required is not so high, from a certain point onwards you only work part-time – and in an area that is more fulfilling or less strenuous than your previous job. Those who follow the Barista FIRE principle then work as a barista in a café, for example, which is where the name comes from. If the money saved can continue to grow, for example by investing in ETFs on the stock market, the income from the part-time job covers the cost of living.
However, the name “Barista FIRE” has another meaning. In the USA, where the movement originated, retired or unemployed people sometimes have to pay for social benefits themselves. As some part-time jobs offer social benefits, supporters of the movement are better protected. In the US, for example, the Starbucks coffee house chain offers benefits to its part-time employees. The term “Barista FIRE” also refers to this.
Barista FIRE: Jobs and sources of income
Part-time jobs in the catering industry are available as part of Barista FIRE. Once you have reached your savings target as part of Barista FIRE, you can, as already mentioned, continue to work – on a more relaxed part-time basis. However, you can not only work as a barista or in other jobs in the hospitality industry.
You can also stay in your old job if you like it and reduce your hours.
There are opportunities for part-time work in all industries – but according to the concept, the new job should be less stressful than the previous one and allow you to lead a more balanced life.
In principle, unlike in the USA, the Barista FIRE concept can be implemented in Germany with any part-time job. You can live even better if you have other passive sources of income – such as share dividends, money from inheritances or from real estate. However, it is precisely this privileged position that is a major criticism of Barista FIRE – more on this below.
Advantages of Barista FIRE
Barista FIRE makes your lifestyle more sustainable and minimalist. With Barista FIRE, you learn to live a more sustainable and minimalist lifestyle by saving money, resisting lifestyle inflation. Instead of constantly buying new things or following every trend, you repair or reuse things. You can also buy many everyday items second-hand.
Barista FIRE can be positive for the environment: Those who live by the principle reduce their consumption for cost reasons. One example: as long-haul flights are expensive, CO2-heavy long-distance vacations are usually not an option. And to avoid food waste, inexpensive meal prep with regional and seasonal products can be worthwhile.
As you won’t be working full-time until retirement age at Barista FIRE, you’ll have time to pursue your passion – for example, writing a book, working for the environment or volunteering. Thanks to a better work-life balance, you also have more time for friends and family and can get more involved in childcare or caring for relatives. Or you can start a new course of study or further training in your free time.
Once you have reached your savings goal, many worries will also fall away as you are financially secure. This can be reassuring and liberating.
Criticism of Barista FIRE
Barista FIRE also has its drawbacks. However, it’s not easy for everyone to save enough to achieve financial independence. This is especially true for people without an inheritance or for those who cannot buy their own home or have to pay expensive rent. Barista FIRE can also have other disadvantages:
If you go part-time early on, this can have a negative impact on your later pension. Working hours have a particular impact on the amount of your pension.
If you work in a mini-job, you are not obliged to pay social security contributions and therefore have less social security cover. This also means you are not entitled to unemployment benefit.
Rising inflation, which reduces your savings, could cause you problems. The future cost of living can easily be underestimated. Stock market crises can also get in your way – so it’s all the more important to start early and diversify your investments.
Long-term part-time work can result in fewer career opportunities in the long term. At the same time
If you are still in the process of saving and are used to a lavish lifestyle, you need to set clear savings goals and stick to them. This often goes hand in hand with sacrifice.
If you have children, you will have to provide for more people and therefore have higher basic expenses and savings goals.
Higher education can lead to better access to suitable and well-paid part-time jobs and a deeper understanding of investment opportunities. Higher social capital, i.e. your personal network, will also give you more security and support in realizing Barista FIRE. These prerequisites are not given for everyone.