A couple that retired in their 30s explains how they calculated their 'FIRE number' and saved up to 70% of their income without feeling deprived

• Kristy Shen and Bryce Leung kept their savings in a bank account for years, planning to buy a home.
• As home prices kept going up, they grew frustrated and redirected their savings into index funds.
• Thanks to aggressive saving, they built a seven-figure portfolio and quit their jobs in their 30s.

When Kristy Shen first heard about the financial independence, retire early (FIRE) movement, she thought it sounded like a scam.

In the early 2010s, the FIRE community was still small, with bloggers like Mr. Money Mustache and J.L. Collins leading the conversation around the 4% rule and the idea that saving 25 times your annual expenses could lead to financial freedom.

"Because I grew up in poverty in China, my thinking was, 'The stock market is scary,'" said Shen, whose family moved to Canada when she was eight.

Her understanding of money was largely shaped by her parents' advice to buy a home and avoid the market. Meanwhile, FIRE bloggers were claiming you could retire in your 30s by utilizing index fund investing. "I didn't really believe it," she said.

At the time, Shen and her husband, Bryce Leung, were focused on saving for a home. The couple, who met while studying computer engineering, were both working in tech and earning good salaries. But homeownership in Toronto still felt out of reach.

"Housing prices would just go up," Shen said.

Their frustration with the housing market pushed them to consider other options and ultimately led them to the FIRE community.

Calculating their FIRE number

Early retirement sounded appealing, but it was economic uncertainty that motivated them to come up with a backup plan, Leung said: "FIRE seemed to be a way for us to kind of insulate ourselves from what were the threats to job stability, which back then was outsourcing."

The couple used the 4% rule, a common FIRE guideline that says you can withdraw about 4% of your portfolio each year in retirement. That means you need roughly 25 times your annual expenses invested. They were spending about $40,000 CAD a year, putting their FIRE number at $1 million CAD (25 times $40,0000).

They expected it would take five to 10 years to hit seven figures. Instead, they got there in just a few. They had a significant head start: By 2012, when they first discovered the online FIRE community, the couple said they had already saved about $500,000 CAD for a down payment. They simply changed the goal for that money. Rather than use it to buy a home, they redirected the money into low-cost index funds.

How they saved up to 70% of their income

Before getting serious about FIRE, the couple said they were saving roughly 30% to 50% of their income, which peaked at around $160,000 CAD combined. Eventually, they pushed their savings rate to 70%.

A big part of that came from avoiding lifestyle creep. The couple stayed in a modest one-bedroom apartment, and their rent remained about the same for a decade.

"Despite getting multiple promotions, we did not increase our lifestyle whatsoever," Shen said. "The only thing we actually did spend on, and we were happily spending on, was travel."

They estimated they spent $5,000 to $10,000 a year on travel, which they called a "non-negotiable."

The key to saving aggressively and consistently is not to deprive yourself completely, Leung said, comparing cutting spending to dieting: "You can do it for a little while, but then eventually, you have a relapse, and you eat an entire birthday cake."

Instead, FIRE is about directing money toward what matters to you.

It also helps to keep the "big three" expenses — housing, transportation, and food — in check, which they did by renting a modest apartment, avoiding car ownership, and cooking at home. That freed up space to spend on what they cared about most, travel, while still hitting their savings goals.

A common misconception about the FIRE movement is that it requires deprivation, Shen said: "No, it's about optimization, not minimization." Tracking spending helped them do that. Once they started looking closely at where their money was going, it became easier to identify what added value and what didn't.

"You don't realize how much money you're actually wasting on things you barely use," she said.

Investing their way to $1 million

Their savings had originally been sitting in a bank account while they planned to buy a house. Once they committed to FIRE, they shifted their money into a diversified portfolio of low-cost index funds, including VTI, IEFA, and ZCN.

They also took full advantage of tax-advantaged accounts.

"Anytime that you have an opportunity to get free money or tax-advantaged money, you definitely want to take advantage of that," said Leung, pointing to accounts like 401(k)s, Roth IRAs, HSAs, and 529 plans. "The less money you give to the government, the more money you have for yourself."

After hitting their FIRE number in 2015, Shen and Leung quit their jobs at 31 and 32 and began traveling the world. They've been living off their portfolio ever since. They've earned some income from their two bestselling books, "Quit Like a Millionaire" and "Parent Like a Millionaire (Without Being One)," but said they don't rely on those earnings to sustain their lifestyle.

According to screenshots of their investment portfolio reviewed by BI, they've more than doubled their net worth since retiring.

For the couple, FIRE ultimately became less about early retirement and more about flexibility.

"The FIRE thing is really nice, but what's actually really important is why you are getting to that number in the first place," Shen said. That became especially clear during a family emergency, when they flew back to help care for Leung's father after he was diagnosed with brain cancer. "We realized, OK, this is what FI is for. You buy your time back so that you can be there for the people that you love."

She added that financial independence also gave them more freedom as parents: "You can actually be present, spend time with them, and not miss out on any of their milestones."

Reaching FI was never just about walking away from work.

"It's not about deprivation. It's not about quitting your job," she said. "It really is about giving you options."