What is FU Money? - FU Money Explained!
A good Ol’ pile of FU Money
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What Is FU Money?
First what the heck is FU money? You’ve heard the term thrown around. Well it’s exactly what it sounds like. Pardon my French here, but the F stands for Fuck and the U stands for You!
So FU Money = Fuck You Money
Basically, FU Money is when you have enough money to not be bound to a toxic work environment or a boss you hate. You have the power to walk away relatively stress free, or if the company unexpectedly laid you off you’d be just fine. In other words, you don’t need that paycheck. At least not for a while.
To be clear, this is not an “emergency fund” of 3-6 months. No, this is when you have 2+ years of expenses saved up and if you were to stop collecting a paycheck there would be zero impact on your day to day life. Heck, should the opportunity arise, you might even take a few trips and have some fun.
With the swearing out of the way lets dive into the details.
FU Money gives you the ability to quit with flair
Why Would You Want FU Money?
There are a lot of reasons you might want FU Money:
You get to dictate your terms of employment
If your work enviorment becomes toxic, you have a boss you don’t like, or the stress levels are just too much, you have the power to walk away. Or Fuck It, just quit! Without impacting your personal life.
Having this level of control over your immediate and medium term financial needs significantly reduces your stress over things you can't control
You’re no longer dependent on a paycheck. Maybe not forever, but you’d be ok for a while.
Which removes stress about money
In theory, your emergency fund would have done this already, but FU Money takes it to a whole new level. There is no situation you can imagine that you’d be in financial trouble.
You can take more professional risk
You might take the risk to start a more challenging, but higher paying job. Or take a job in a new industry, start freelancing or move to a new place for personal reasons. If it doesn’t work out, you know you’ll be ok financially.
Gives you personal freedom
If you want to take a sabbatical or take time off to care for a loved one or enjoy an important moment in life (like having kids), you have the financial freedom to do so.
You can loosen the purse strings a bit
By the time you reach the FU money stage you are very financially secure. As long as you're responsible, occasionally spending a little extra on the finer things in life shouldn’t be a problem. Just don’t get carried away!
How Much Money Is FU Money?
This depends on a few factors. Since personal finance is personal, well, the answer will be different for everybody! In general, if you are debt free and have 2 years of expenses in liquid assets, then you have FU money.
This means if you have $50,000 in yearly expenses and you have $100,000 in cash or assets, such as stocks, you can immediately cash it out should you need to. FU Money doesn't include money in your retirement savings, or equity in your home or car. It is money you could go to your bank or brokerage and get within 24 hours.
Now this may sound like a lot of money, especially when you don’t include retirement savings or money tied up in physical assets. And well, that’s because it is. This is FU Money and is an advanced stage of financial independence. The next step on the ladder would be retirement from work all together!
How Do You Get FU Money?
Not everybody is able or willing to put the work in to reach this elite club of having FU Money. But many people can. In general the same principles of saving for retirement also apply to saving for your FU Fund.
A few things to keep in mind as you work toward this goal are:
You should have all high interest debt paid off. At this point you should have very little, if any, debt. Certainly, no toxic debt (debt over 5%) such as credit card, or student debt. Even if you have enough money to pay 2 years of expenses you might not have FU Money.
If you have a car loan or a large loan on your house, what would happen if your car was totaled? Or your house dropped dramatically in value due to market conditions or a natural disaster?
Would you still have the freedom to just walk away from a steady job? If not, you haven’t reatched the FU Money stage. This stage means your personal finances are armored and literally nothing life can throw at you will be able to stop you from making decisions on your own terms
The money needs to be accessible to you to be FU Money. This means in addition to paying off debt and saving for retirement, you should be putting money into a savings account you have access to, or a taxable brokerage account that doesn’t have the withdraw limitations of a 401K, ROTH IRA, or traditional IRA.
The money needs to be relatively stable. Remember this is money you expect to backstop you when you make major life decisions. When you quit your job, or make big life decisions, the decisions are often not reversable. The last thing you’d want to happen is getting laid off only to find the money you thought you had was invested in some speculative start up company that went to zero.
Possible things you might keep in your FU Fund are:
Cash
CD’s
Index Funds
Bonds
Things to avoid for your FU Fund are:
Cypto currency
Individual stocks
Physical assets (Home, cars, gold etc)
HELOC / other forms of available credit
What’s Next After FU Money?
As I hinted to earlier, the FU Money goal is really a step on your financial journey. It comes after your Emergency Fund is fully funded with 3-6 months or expenses but you haven’t yet accumulated enough wealth to quit working forever. It’s a great goal and personally, I found when I hit my FU stage in life I was a lot less stressed in general. I knew I had to keep working and saving toward my goal of FIRE but I wasn’t too concerned because no matter what happened I was pretty confident things would work out.
If you’re still early in your wealth building process but you aspire to reach the FU Money stage as quickly as possible, check out these articles to help get your started.
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