What is Barista FI?

Retiring in your early 40s is an attractive goal, but not everyone wants to stop working entirely or adopt a frugal lifestyle to get there. If you're looking for a balance between work and financial freedom, Barista FI might be the right fit for you.

Barista FI is a flexible approach to financial independence. It finds a middle ground between full-time work and complete financial independence. Instead of aggressively saving to quit work as soon as possible, Barista FI focuses on saving enough to cover most of your essential expenses. You'll cover the remaining costs by working part-time or in a lower-stress job.

In simple words, when you follow the Barista FIRE strategy, your living expenses are covered by a combination of passive investment income and a part-time job. 

How Can You Retire Early with Barista FI?

With the Barista FI (or Barista Financial Independence) strategy, you can enjoy a more relaxed lifestyle before you reach your full FIRE number. Instead, once you’ve saved a specific amount—your Barista FI number—you can transition to a more comfortable, lower-stress job. Your savings and investments will cover most of your expenses, typically over 80%, while your part-time or low-stress job takes care of the rest.

Barista FI lets you retire much earlier because the savings you need are significantly smaller. This approach lets you slow down and enjoy life sooner than other FIRE strategies like Fat FI or Lean FI.

Calculating Your Barista FIRE Number

To know how much you need to save before you can switch to a part-time job, you’ll need to calculate your Barista FIRE number. Start by knowing two key figures: your annual expenses and the average income you’ll earn each year from your part-time job.

Let’s say you estimate you will need $50,000 yearly to cover all your retirement expenses. If your part-time job brings in $15,000 each year, you subtract that income from your total expenses. This leaves you with $35,000 that your savings need to cover.

Barista FIRE Number Calculation:

• Annual expenses: $50,000
• Income from Part Time Job: $15,000
• Expenses to Cover with Investment: $50,000 - $15,000 = $35,000
• Barista FI Number: $35,000 x 25 = $875,000

This means you need to save and invest $875,000 before you can comfortably switch to a lower-stress, part-time job. 

Is Barista FI the Right Strategy for You?

Barista FI could be a good option if you don’t want to step away from work entirely. With a mix of passive income and part-time earnings, you can continue working somewhere that aligns with your interests. 

Starting your financial independence journey with Barista FI allows you to leave your full-time job much sooner. And over time, if you decide you want to fully retire, you can just amp up your working hours and move towards complete financial independence.

Achieving Barista FI with ReachFI

With ReachFI’s financial planning calculator, you can enter your earnings, savings, and expenses to find out exactly when you can shift to a part-time job and start reaping the benefits of Barista FI.

You can easily adjust your savings rate, expected expenses, and part-time income to see how even small changes can make a big difference in your retirement timeline.