Let's Talk About F(orget) You Money

[ichangedmyname]

Just wanted to pick your brain. If you please could answer and satisfy my curiosity:

1. I am trying to determine the difference between emergency fund and FU money. I seem to be reading different personal definitions. How would YOU define them?
**I think Emergency Fund is of course for emergencies like car repairs, the garbage disposal broke down, ooops I got fired. FU money is the magic number that makes it possible to walk away from your current job (hell) and still stay afloat for a certain number of months, most likely six.

2. How would you calculate FU Money?
**I don't have a formula but I'm thinking $10k in liquid accounts not including retirement and investment (?)

3. Where would you keep your FU Money so it's still working for you?
**Should it be in index funds, bonds, savings? I don't know.

4. Comments, suggestions or violent reactions about FU Money.

Thank you!

[Iron Mike Sharpe]

FU money is the amount of money you need to never have to work again.  i.e.  Financial Independence.

[WalkingWisp]

FU money is the BIG number.  The retirement money in 401k/403b, IRAs, the taxable investing accounts, the total networth (minus housing for me personally unless you can move and gain that equity) that will allow you to have 25 times your annual spending.  So if you spend 40k per year, that's $1,000,000 in order to finally have "FU" money.  Now, that's just a general guideline using a 4% withdrawal and 7% gains in investments (including inflation).  Your numbers might vary.

If you only need 25K to live off of for the year, then you only need $625,000 to have FU money.

But until you've hit that number, you're either going towards more risk or a higher chance you'll *need* to re-enter the workforce.

Emergency money is much more liquid, and much lower.  THAT is the stuff where you have 4-6 months of monthly expenses stashed away in savings accounts and the like.

[wtjbatman]

FU money is the amount of money you need to never have to work again.  i.e.  Financial Independence.

That's how I always looked at it. Emergency Fund is, "Oh crap I just got canned, good thing I can afford to live for 6 months on my EF alone".

FU money is you walking out the door and asking "Who's coming with me?!"

[dragoncar]

We discussed it here, with no real agreement:

https://forum.mrmoneymustache.com/ask-a-mustachian/how-much-is-your-fu-(not-fire)-money/

I'm still of the opinion that:

1) emergency fund is just for emergencies as you said
2) FU money is less than FI -- the amount where you can safely walk out of your job if your boss pisses you off but you'd still need to get another job (possibly lower paying) until you are FI
3) FI money is enough so you never have to work again

[matchewed]

I personally wouldn't define FU money as FIRE. FU money would be enough money for you to walk away from a career, switch careers, or lose your job and know you'll be okay. Of course there will be some overlap with this and the emergency fund, but the emergency fund is (IMO) exclusively for the emergency and unexpected.

With FU money you will still have to work some time in the future, you aren't quite FIRE yet. None of these are hard lines though, more like fuzzy grey clouds.

I personally am going through this right now. I have a certain amount of liquid assets available and I'm sick of my current job, so I'm going to go back to school for a career change which will delay my FIRE goal by 2-4 years. I'm not FIRE, but I have enough to say enough.

[ichangedmyname]

We discussed it here, with no real agreement:

https://forum.mrmoneymustache.com/ask-a-mustachian/how-much-is-your-fu-(not-fire)-money/

I'm still of the opinion that:

1) emergency fund is just for emergencies as you said
2) FU money is less than FI -- the amount where you can safely walk out of your job if your boss pisses you off but you'd still need to get another job (possibly lower paying) until you are FI
3) FI money is enough so you never have to work again

I feel the same way. I guess for me FU is to my job not to working ever.

[Russ]

I'm still of the opinion that:

1) emergency fund is just for emergencies as you said
2) FU money is less than FI -- the amount where you can safely walk out of your job if your boss pisses you off but you'd still need to get another job (possibly lower paying) until you are FI
3) FI money is enough so you never have to work again

samesies. FU money is maybe a couple thousand $$ for me

another requirement could be that emergency money can be accessed quickly, i.e. for me in under a week, FU money a little longer (maybe a month or so?)

[wtjbatman]

One key difference is that I think everyone should have an emergency fund, nearly everyone here believes in ER/FI (although certainly not everyone in general), but FU money is very optional. I've never even considered worrying about having FU money, and I don't have an FU money fund that I am saving into.

[boy_bye]

FU money is whatever amount you need to feel comfortable saying "FU" at your job when it gets too stupid to handle anymore. it's gonna be different for everyone.

[NumberCruncher]

FU money is whatever amount you need to feel comfortable saying "FU" at your job when it gets too stupid to handle anymore. it's gonna be different for everyone.

I agree -- for me FU money would be pretty close to FI money because I hate risk >.>

But I fully accept that someone else's FU money fund could be a year of expenses, or even less.

[WalkingWisp]

Oh wow, I wasn't aware FU money was different than FIRE.  I stand corrected.

I can see how this can be a fuzzy area depending on your comfort level though.

Because if I didn't like my job, I'd start searching for a new one and then once I found one, THAT would be my cushion to be able to change jobs.  Not a pile of money to hopefully outlast my job search.  Not in these times.  Again, that's just me.

Because you still need to pay that mortgage, you still need to pay the bills, you still need to save more money for FIRE..... the check-writers of the world still have a card hanging over your head.  Until that card is gone, you don't have FU money.  You'll eventually come back and say "sorry I said FU a while back, I didn't mean it".    Even if that means working for yourself, or a new employer.  You still have to do it based on your goals/needs.

FU money *to me* is just another word for FIRE. 

Although, everything I just said above would go out the window if my job infringed upon my health, my sanity or my family.  So, there's that.  ;)

[sheepstache]

Oh wow, I wasn't aware FU money was different than FIRE.  I stand corrected.

I can see how this can be a fuzzy area depending on your comfort level though.

Because if I didn't like my job, I'd start searching for a new one and then once I found one, THAT would be my cushion to be able to change jobs.  Not a pile of money to hopefully outlast my job search.  Not in these times.  Again, that's just me.

Well, I wouldn't literally say FU and storm out of my current job, but that's what I consider FU money is for: the option to.  I'm like you, if something made me want to quit my job, I'd get another one and then quit.  I'd never just walk out.  However, some people can't walk out because they need their next paycheck to live.  That would feel like horrible slavery to me.  So FU money is what allows me to CHOOSE to stay in the job until I get another one.

To actually answer the OP's question, since I calculate my emergency fund on the "oops I got fired" principle, it's equal to FU money in my mind.  However, I like the point someone made that if they were separate accounts, the emergency fund would have to be more quickly accessible than FU money.

[Jamesqf]

I think the difference is that FU money is bare survival for the rest of your life - what I call being independenttly poor - while FI money is the larger amount that allows you to maintain your preferred lifestyle.

[WalkingWisp]

I think the difference is that FU money is bare survival for the rest of your life - what I call being indepently poor - while FI money is the larger amount that allows you to maintain your preferred lifestyle.

Interesting to consider, I never thought of that.  Independently poor.  That just might become my new baseline for FU money.  Thanks Jamesqf!

[senecando]

For me it was a few months' spending in cash and the knowledge that I could take money out of my Roth if I couldn't find a job quickly enough. I had about a year's worth of spending between cash and my roth.

My last job asked me to come in and not "clock in." I was able to say no. I think I was without work for about two months, which included a sort of expensive road trip I'd already planned.

[train_writer]

FU money is my first goal towards FI and I define it as '5 years of expenses for 2 adults' (without calculating the savings of my spouse).
This is, in my opinion, on the extremely safe side for a 25yo without kids.

I will reach this goal approximately this month and meanwhile  the atmosphere on my work project is growing toxic.
It allows me 'freedom of mind' to leisurely start looking for other places to work and the knowledge of 'i can just walk out and quit' gives me personal power.

[Mlkmn]

My wife and I both agree that once we have the student loans paid off and about a years worth of savings we will be at FU status, just not at the same time. As long as one person is working the other could stop and we would still live comfortably. If we both had to quit at the same time we could make it work pretty easily until we found other employment, which shouldn't be hard since I am a nurse and can go just about anywhere.

I see FU just as the ability to bring the maximum amount of leverage to your job, the ability to walk away without concern about the loss of income. I don't think you need enough money to never work again to do that.

[tracipam]

My brain thinks FU and FIRE is basically the same... 

My gut apparently thinks differently.  When I was in grad school and hating hating hating hating hating it, I finally got into a position where I could save up some money "just in case."  It was amazing, but it only took a few months of spare expenses (I think about 4-6) before the presence of FU money calmed me down.  Just knowing it was there and if for some reason things were totally untenable I could leave was enough to let me stick it out. 

So, I guess my stomach thinks that FU money is about 6 months expenses.  It's still true--today my boss was talking about how much business would have to drop before people got fired and my net reaction (with much more than 6 months expenses safely in the bank, now) was, *shrug*.

[dragoncar]

My brain thinks FU and FIRE is basically the same... 

My gut apparently thinks differently.  When I was in grad school and hating hating hating hating hating it, I finally got into a position where I could save up some money "just in case."  It was amazing, but it only took a few months of spare expenses (I think about 4-6) before the presence of FU money calmed me down.  Just knowing it was there and if for some reason things were totally untenable I could leave was enough to let me stick it out. 

So, I guess my stomach thinks that FU money is about 6 months expenses.  It's still true--today my boss was talking about how much business would have to drop before people got fired and my net reaction (with much more than 6 months expenses safely in the bank, now) was, *shrug*.

Based on all the responses I've seen, I agree that FU money is defined more emotionally, and FI more mathematically.

[Spork]

We discussed it here, with no real agreement:

https://forum.mrmoneymustache.com/ask-a-mustachian/how-much-is-your-fu-(not-fire)-money/

I'm still of the opinion that:

1) emergency fund is just for emergencies as you said
2) FU money is less than FI -- the amount where you can safely walk out of your job if your boss pisses you off but you'd still need to get another job (possibly lower paying) until you are FI
3) FI money is enough so you never have to work again

I feel the same way. I guess for me FU is to my job not to working ever.

me too.

I walked out of a job that was sucking my soul, picked up and moved -- all with no prospects in sight.  It took me 3 years to find a reasonable job.  I didn't sweat it (much) ... because I had FU money.  It wasn't an emergency... and I couldn't have FIRE'ed at the level I wanted to FIRE.  But I was able to bail and not care.  To me this was the definition of FU.

[HappierAtHome]

I'd say FU money is a few years' expenses - enough that you would feel secure walking away from a crap job. FU money is a long way from FIRE money for me.

[Longwaytogo]

Everyone's different I guess.  Being self-employed changes things up a lot because I give the proverbial FU to people all the time when I don't think they would be a good customer. (and I have no money and a debt emergency). In fact in the summer of 2012 I said FU to the entire recession/industry and decided to spend a few years raising my young kids and then pick up where I left off when they start public school. Of course I'm relying on my wife's salary to do this. But just the security of her job coupled with our cutting expenses was enough FU for me.

So I assume FU money is based on the individuals ability to take shit from people (employers) and not an actual $ amount. Some people with a couple hundred thousand in the bank would live out another 20 years in a job they hated where another person with nothing would move into their parents basement and put themselves through college working at Starbucks to change into a career they loved. So its going to vary widely. I think it would be different for everyone and nowhere near FI. But again that's just my opinion and sounds like everyone has their own.

[MichaelR]

IMO
An emergency fund is for a major repair bill. Enough to replace your car if it blows up. $5000 to $20000 for most of us. It is usually what you keep in your savings assumes you are still working.

FU money is enough to sustain you if you lose (or leave) your job. For most this will be 6 to 12 months of living expenses. The assumption is you will be returning to work at some point. This money will be in bonds or stocks.

FI money is enough to sustain your living expenses on passive income indefinitely without working. This money will be in bonds or stocks or property.

[happy]

I'm still of the opinion that:

1) emergency fund is just for emergencies as you said
2) FU money is less than FI -- the amount where you can safely walk out of your job if your boss pisses you off but you'd still need to get another job (possibly lower paying) until you are FI
3) FI money is enough so you never have to work again

This.

Depending on your risk tolerance/ liabilities etc, these will all sit at different amounts and proportions.

For me,  I probably wouldn't voluntarily leave until I had another job. But I'm slowly getting more feisty..there's a limit to what I will put up with before I start looking.

[Anatidae V]

For us, it's defined as follows:
1.  Emergency fund is 1 month's expenses, because we use YNAB to save for everything that can be known or approximated as we go, and plan our spending 1 month in advance. That's $5k for us. If we had an emergency that costs more than that, we're probably in more trouble than is worth worrying about, and it's time to move back in with the folks...

2.  My FU number is, I think, 6 month's expenses in the bank/somewhere reasonably but maybe not straight-away accessible. We don't have this yet, but based on last year's spending it would be $35k. That not only would let us say F off if we were in an uncomfortable position, but we'd also be more secure about the possibility of a small human surprise. I'm reducing my working hours now for mental health, and we don't have FU money yet, but having it would allow me to tell my boss I'm taking a long unpaid leave if I needed it (not uncommon at my work, but normally for travel).

3. The place to keep FU money... wherever it's safe but earning. At the moment, a high interest savings account seems to make the most sense, but some term deposits would also make sense, although for me right now I'm getting a higher interest rate on my savings account than I've seen in a term deposit (I should look around some more!).

[Khan]

Emergency fund: a couple months of cash

Full emergency money: 6-12 months of expenses(via easy to access assets, cash, debt, however you have it)

FU Money: I like to think of it as ~100k or 5 years of expenses. Think about it like this: you can survive without employment for 5 -years-. At this point layoffs mean nothing, job markets mean less(especially if you have employable skills), and you can quite easily relocate yourself anywhere, retrain, take time off, whatever is your will.

FU eternity(FI): You have attained your freedom from work and middle class slavery. Now you do whatever it is that pleases you. Is it still your work? Consider yourself lucky. Is it fishing all day? Have at.

[rubybeth]

1. I am trying to determine the difference between emergency fund and FU money. I seem to be reading different personal definitions. How would YOU define them?
Our emergency fund basically covers our medical and car insurance deductibles in case of a major accident. We don't own a house, but if we did, I'd want more in the emergency fund in case a pipe burst, etc. I'd agree that FU money is an additional stash that would allow you to quit your job and not worry about finding a new one for at least a few months (for me, I could be looking at a 6-12 month job search, but in other industries, that could be much shorter).

2. How would you calculate FU Money?
I'd want enough to cover our "essentials" (rent, utilities, food, health ins.), plus some extra to help with a nationwide job search (I've traveled to Chicago and Florida for interviews, and these costs can rack up quickly).

3. Where would you keep your FU Money so it's still working for you?
We kind of have an FU fund that's in stock that we could immediately sell, if needed. It's a taxable investment account through Fidelity, which is also where we have our checking (brokerage) account so it could easily start paying for our rent and food as soon as we sold the stock.

I'd also add that I think FU money is different than FI money, at least for people who aren't into early retirement. For example, I've talked to one of my family members who makes good money about early retirement. He likes his job and the money that comes with it, but I suggested that he could max out his 401k and not even miss the funds, he was skeptical. But when I said, "well, think about it like this... if you saved more money, you could say 'screw it' when things got stupid at your job and take off 3 months to go skiing in the mountains, and then get a job whenever it suits you" and he seemed to like that idea more than "early retirement." It's really just a terminology thing, but getting people to put aside a year's worth of living expenses probably seems a lot more do-able to most people than saving for "retirement" which in most people's minds is a lengthy period of time in which they are old, maybe sick, etc.

[Gray Matter]

All this talk of emergency fund and FU money has really gotten me thinking.  I was confusing the two, and consequently keeping way too much money in an emergency fund (120K).  This discussion has helped me straighten out my thinking about these two.

1.  Emergency fund - enough to allow us to limp along for a year or two if we both lost our jobs.  Taking into account severance and unemployment benefits, we would need about 30K.  I recently took the cash above this amount and invested it.

2.  FU money - this one is hard.  I see it as different than FIRE money, but the more risk averse you are, the closer together these two numbers are.  I am relatively risk averse when it comes my confidence in finding gainful employment, so this number is higher for me than for many.  I would probably want something like 5 years of living expenses invested outside of retirement accounts before I would feel comfortable walking away.

Of course, there are other factors.  If my husband's job seems stable (which it is not currently), then I would be willing to walk with a far smaller safety net.  And if I hated my job and felt like my health (mental or physical) was at risk as a result, I would be willing to walk sooner, but not without a year or two safety net.

3.  FI - while we are close to being what I call "worst case FI," meaning if we downsized and cut out travel and all extraneous spending and didn't have pets and didn't pay for our kids college, we are close to being FI, we would need to double our stache before I felt truly FI.

[limeandpepper]

For me,

Emergency fund: A sum that is enough for me to feel somewhat comfortable with the less expected things in life.

FU money: A sum that makes it feel significantly easier to contemplate leaving my job without another one lined up. An amount whereby I could shrug if there were layoffs in my company. Enough that I could take a risk with my career, go on a sabbatical, etc.

FI money: A sum where I could feel pretty secure in not having to work ever again if I don't want to.

I think FU money is mostly based on personality and emotions. Some people are just more carefree, others need more security. So there isn't going to be one calculation that will suit everyone. Also, I don't keep my money in specific places for these categories. Enough of it is allocated in low-risk investments that they will be easily accessible as needs arise, within reason.

[Emilyngh]

I no longer have what I consider an emergency fund.   I do have checking accounts that I put money into every month for irregular large expenses (like car repairs).   I do not consider these emergencies, but pretty predictable expenses over the long-term.   Any true emergencies would be covered from our general savings (which most of which is invested, but I can still get in 5 days and use a cc if needed).

To me, I don't have FU money until I have FI.   I'm 32 and our current net worth is $170k;   I don't consider this FU money.    If I told my job "FU," it would be very hard to get another equivalent job, almost impossible in the area we are in close-ish to my parents, etc.    By equivalent I mean one with the same pay (pretty much minimal to live on and progress toward FI, but still hard to find for a job with everything else I want), same autonomy (tons, very close to unlimited), same hours (super flexible, practically PT), equivalent area (gorgeous, low COL, close enough to family, cute town nearby, etc).    Granted, I would not starve on the streets, but to me, until I am close enough to FI that I really could not worry about finding another FT job with the above if I didn't want to, I'm not at the FU point.   Telling my current job FU to have to wind up moving to somewhere we don't want to live to work in a cubicle 9-5, or be in the rat race, or have to be someone else's bitch, is not acceptable to me.

[mbolton]

EF = 1 Year's Worth of Expenses Saved
FU = EF + No Mortgage
FI = FU + 25*EF

[Ocinfo]

http://jlcollinsnh.com/2011/06/06/why-you-need-f-you-money/

Emergency funds and FU money can take many forms. For me, I don't really make a distinction because there are ways to access funds without specially allocating them to one bucket or another. For emergencies, I can easily cash flow so I don't maintain a dedicated E-fund. As far as FU money goes, I have after tax investments and some rental income that I could easily live on for several years. Not to mention Roth IRA and an old rollover IRA as well as 0% interest CCs if ever needed.

FU money is about being able to stop working a job you dislike and not have to worry about how long it takes to find a new job, go back to school, or start a business. This will be different for everyone based on risk tolerance, spending, and job availability. I like my job but it's nice to know that if something changes, I can give my notice and take time off without worry. My spending is relatively low so augmenting portfolio withdrawals with PT income makes a big difference as well.



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