I first heard the term FU money from JL Collins the author of The Simple Path to Wealth*. He described a situation in which his job would not allow him to go travel in Europe but because he had enough money saved he was able to quit and go anyway. Thanks to the FU money and the power of quitting (which I will talk about in another post), his employer actually came around and gave him the time off. Having additional funds saved gives you the flexibility to do the things in life that you want.
It’s an interesting concept, having money saved for the unexpected, it allows you to have so much freedom in your life. When opportunities present themselves it can allow you the freedom to explore those opportunities, which you may not otherwise be able to if you are living from paycheck to paycheck. Without saving you may not be able to take a risk on starting a business for fear of not getting by, but which may actually make you more money in the long run. Having that FU money lets you take the risk which could lead into a much more lucrative and fulfilling adventure.
Not only does this provide you with more opportunities, but it can also help you enjoy your current work more. You will feel less trapped knowing you could afford to be unemployed for 3 months, 6 months, maybe even a year. Most people in the FI community suggest that you have at least 3-6 months worth of living expenses set aside in case of emergency. The bigger you grow that pile of FU money the more confident you are going to be in saying no to things you don’t want to do and the more confident you will be when asking for what you really want.
Most people are scared to ask their employer for what they feel they deserve or for what they want. It’s much easier to have those conversations if you have a stack of FU money to back you up. All of the above reasons are why it is so important to have savings, don’t think of it as an emergency fund, think of it as a stack of FU money that will allow you to follow all of the opportunities that life may present.
What would you do with your FU money?