What Is FU Money?


There are many things money can buy, but the most important one of all is freedom

With regards to freedom, I’m specifically talking about being able to do:

  • what you want
  • when you want
  • for as long as you want
  • with whomever you want

And the best way that can be accomplished is with something called the concept of FU money.

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What Is FU Money?

I first heard the term “FU money” in JL Collins’s book, “The Simple Path To Wealth“.

He told a story about how his company let him go shortly after 9/11.

A year later he was watching a documentary with his 8-year-old daughter about the Great Depression.

After seeing people suffering from a job loss standing in a bread line, his daughter asked, “Daddy, are we poor?”

He answered “no” but she replied, “but you don’t have a job.

He went on to explain that there wasn’t a problem because they had money working for them instead of “daddy” working for it.

Even though that’s what he told her, in reality he was thinking:

This was exactly why I worked hard to be sure I had FU money.”  

Speaking of FU money, one thing is clear: It’s a good thing to have.

FU money is a non-vulgar way to say that if the “poop” hits the fan at work, then you can leave and not have to deal with any BS because you have enough savings.

Reminds me of the old Johnny Paycheck song, “Take this job and shove it! I ain’t working here no more…”

Isn’t FU Money Just An Emergency Fund?

You may be thinking that FU money is nothing more than money saved in an emergency fund. 

But there is a difference.

Emergency savings are set aside for just that…emergencies.

Most popular financial folks, such as Dave Ramsey, recommend keeping 3-6 months worth of living expenses saved in these accounts.

This money is ear-marked for unexpected expenses or to help hedge against a lack of new income for a few months.

Examples include your car breaking down or a tree falling on your roof. 

Typically an emergency fund won’t be enough money to sustain you long-term if you decide to quit your job.

And that’s where FU money comes in. 

Why FU Money Matters

In 2020, over 500,000 health care workers either quit or were fired from their jobs.

High-income professionals (physicians, dentists, lawyers, engineers, etc.) are experiencing sky high burnout rates and are looking for a way out. 

There are numerous studies that report workers are extremely stressed out at their jobs and dread going to work.

FU money matters because:

  • Decreases overall stress about money 
  • Allows you an opportunity to take time “off” if needed
  • It puts you in a position where you’re NOT working for money, it’s working for you
  • Stops dependence on a paycheck
  • Lets you explore different career paths
  • You are now your “own” boss
  • Increases life and career options

Who Needs FU Money?

I can see how FU money would never register with the “new” professional (doctor, attorney, etc.).

When I completed a residency in 2005, I had no doubt in my mind that I was in it for the long haul. I’d spent 25 years of education and sunk $300K+ in obtaining a degree. So why would I ever do anything else?

That’s what we all think, right?

But what happens when you’re a financial advisor and the stock market crashes (Sept. 2008).

What about if you’re an ER doctor treating COVID-19 patients for months without a day off and then told that your hours are getting cut in half?

In my opinion, it doesn’t matter if you think you’d ever use it or not, everyone should pursue a F U money account.

Even if you’re a dentist and love giving patients more confidence with a “new grill”, building a FU money stash can help decide if you’d rather:

  • cut back to part-time
  • go a different career path
  • take an extended period of time off
  • start another career
  • retire early via financial freedom

You can’t predict the future regarding whether you’ll stay in your career or not. And having FU money saved gives you financial security and acts as an insurance policy of sorts depending on where life takes you.

FU Money and Financial Independence (FI)

The FIRE movement (Financial Independence Retire Early) spawned FU money, but it’s not exactly the same. Most of the people with this type of money are still working. Heck, many of them enjoy what they do.

But this extra money is a bonus that gives them the ability to work with lower stress. How would you feel knowing that at any time you could walk away?

You’d probably have a different attitude at work, right?

You wouldn’t have to worry about being fired or staying in a bad situation or toxic work environment because you could walk at any time.

That’s a nice feeling to have… the freedom to leave and pursue whatever you want whenever you want. 

It’s too bad that’s a freedom that most of us don’t actually have.

How Much FU Money Do You Need?

As you can imagine, one of the main questions regarding FU money is how much is needed.

The amount you’ll need will vary depending on various factors:

  • amount of debt owed
  • annual income
  • basic expenses (monthly expenses) 
  • amount saved and invested annually

An easy way to figure a FU money amount would be to develop both short term goals and a targeted FI number.

Short-term FU Money

Think of short-term FU money as an “advanced” emergency fund. This is money that’s saved to get through 1-2 years of not having to work.  

Basically you can quit your job and not have to worry about living expenses for an extended period of time. 

This should be more attainable to reach because it’s not a lot of money that’s going to have to last forever.

The great thing about this money is that it’s a cushion that gives you options. This allows you to take some time off and figure out what the next career move will be.

It’ll also act as an insurance policy in case of an unexpected job loss.

Financial Independence FU Money

Financial Independence FU money (FIRE money) is the next pot to fill after you’ve built up short-term FU money.

Once most high-income professionals learn about the concept of financial independence / retire early (FIRE), many start to take the road to get their ASAP. 

There’s two ways to do it:

  •  The Accumulation Method
  •  The Cash Flow Method

#1. The Accumulation Method

A lot of people are familiar with this method when it comes to building wealth. It typically involves working with a financial advisor to “accumulate” a large pile of money so you can live off of happily ever after.

In order to make this happen, investing as early and aggressively as possible is the key to success. 

Most financial gurus teach that you’ll need to accumulate roughly 25x your personal annual expenses. For instance, if they total $180,000 ($15K/month), then your FIRE number conservatively would need to be $4,500,000 (25 x $180,000).

This is the part where the 4% rule becomes important. 

The 4% Rule

According to Investopedia:

This rule is used to determine how much a retiree should withdraw from a retirement account each year without running out of money. 

It was originally created using historical data on stock and bond returns over the 50-year period from 1926 to 1976.

It seeks to provide a steady income stream to the retiree while also maintaining an account balance that keeps income flowing through retirement. 

In our example above, this person could withdraw 4% of the $4.5M ($180,000) annually without the need to work or bring in any more income.

#2. The Cash Flow Method

Instead of spending years attempting to accumulate a big pile of dough to live off of, this method shortens the time horizon to allow you to reach FIRE much quicker. 

I don’t know about you, but it would take the average person virtually their entire career working to accumulate $4.5M.

Now I understand that they could drastically lower their expenses but who wants to work their whole life and resort to living like a monk? No thanks.

One of the more popular methods to invest for cash flow is by using real estate.

In this example, I’m going to use what I’m most familiar with, passive real estate investing via syndications

At a 7% cash flow rate, only $2.5 million would produce $175,000 per year in distributions virtually tax free.

How? The benefits of depreciation offsets most of the monthly income.

Here’s the other benefit. The original $2.5M invested in real estate will continue to appreciate even though you’re living off the $175,000/year. 

If you had a mutual fund worth the same $2.5 million, you’d have to pay capital gain taxes with each distribution taken.

Also, depending on what the stock market is doing when you take money out, you may start to dip into the principal.

Again, not with a syndication investment.

Now I hope you understand the power of investing for cash flow for an endless supply of FU money!

The Next Step

If you’ve never thought of starting an FU fund until now then what are you waiting for?

To me, this is nothing more than a steppingstone to get you ready to leave your 9-5 and take the next step in your life’s journey.

For my wife and I, real estate syndications have been a key player in helping us accomplish this.

If you want to know what we personally invest in throughout the year, sign up for our free Passive Investors Circle below. 

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  1. We’ve actually been talking about FU money on Wall Street forever, at least since I worked at Goldman Sachs in 1999. That was the year the firm went public and all the partners got very wealthy.

    I did a survey, and the minimum threshold for rich is $5 million.

    But I think $10M+ Per person is FU money.


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