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There are varying stages of financial independence, all offering different degrees of security and status.
Building wealth eventually gets you to the stage of “FU money,” whether or not you know what this is.
FU money refers to wealth outside of what you use to cover living expenses and saving contributions.
This level of wealth indicates that an individual is financially independent and makes decisions not based on affordability.
In this article, we dig deeper into the definition of eff you money and look at how it differs from your emergency fund.
We also consider why you should aim to reach this level of financial independence and what you need to do to get there eventually.
Table of Contents
The Power Of FU Money
FU Money Defined
FU money is a cleaner way of saying f— you money, implying that your savings will allow you to leave toxic situations without worrying about your finances.
You can walk away from a boss or a work environment because you have gathered enough money to say “FU” and not worry about losing that income.
It is essential to note that FU money is not the same as your primary emergency fund.
Also, the amount of money you need to reach financial independence varies depending on your situation.
FU Money vs. Emergency Fund
FU money is more than just an emergency fund.
An emergency fund is an amount of money to cover unexpected expenses over the short term.
For example, an unexpected job loss, your car breaking down, or your water heater failing.
An emergency fund is a precursor to financial independence FU money.
Emergency cash should be one of your financial goals to protect you from unexpected expenses or hold you over until you get income flowing.
Eff you money is a level of financial independence beyond your emergency fund.
This extra money is a benefit for the following reasons:
- Lets you decide to go without income
- Allows you to spend money without worrying about the future
- Can sustain the cost of living for at least six months (but usually longer)
These may seem like minute changes in the amount of money saved, but they are key differences that mark different tiers of financial independence.
How Much FU Money Do You Need?
The money you need to save for FU money varies depending on:
- Your living expenses
- Your plans for the future
- The emergencies you need to plan for
- The level of comfort you expect
You can start by defining what your emergency fund should look like.
This should include enough money for most people to cover 3 to 6 months of current living expenses.
Because of various factors, like the region where you live or your lifestyle preferences, there is no specific number to lay down.
Your emergency savings should be able to cover particular situations on top of this number, such as emergency vet visits, home repairs, or vehicle repairs.
Someone who uses public transportation, has two pets, and rents their home will have a much different number than a homeowner with an SUV and no pets.
Once you determine how much money you need to set aside to cover emergencies, anything above that may be considered FU money.
This depends on how comfortable you are parting with money above what you have saved for an emergency.
Because FU money tends to be large, I recommend you consider having two goals to achieve: short-term FU money and financial independence FU money.
The short-term FU money amount will last you a few years of living expenses but won’t allow you to retire early.
You will need more money to achieve this.
And this is where financial independence FU money comes into play.
This level of wealth allows you never to have to work again.
The money saved is more than enough to cover your monthly expenses and daily cash flow without worry.
- Read now: Learn how to retire early
Why Does FU Money Matter?
FU money matters for several reasons, and everyone can benefit from having money working for them.
This level of financial independence offers these benefits:
- Holds safety and security
- Prevents decisions based on fear
- Provides more options in your life and career paths
- Indicates the right path for future wealth
Everyone deserves these benefits in life, from the average person to a small business owner or someone from wealth.
Safety And Security
Daily life is not easy to navigate, less so now than ever.
Still, everyone deserves the feeling of safety and security when they achieve financial independence.
When you build FU money, you have much more breathing room than you’ve ever had before.
This breathing room has less to do with what you need the money for and more to do with your mental state.
Everyone deserves peace of mind when it comes to financial decisions, and reaching a mental state where this is possible takes the weight of your finances off your shoulders.
No Acting Out Of Fear
Building on that, those without FU money tend to make fear-based decisions.
They are less likely to do things like:
- Question a toxic work environment
- Take sick days
- Pursue their passions
FU money can be the difference between a mediocre life and a good life.
When you have enough money to feel comfortable questioning where you are at in life, you find that you have more control over your future and your decisions.
Enough Money For More Options In Your Life And Career
When you throw fear out the window, you will find more options regarding your life and career.
The financial security you have gives you the time and resources you need to do things like:
- Start your own business
- Invest in the stock market
- Retire early
- Quit your job
All of these decisions are rooted in how comfortable you feel with your personal financial situation.
Beyond that, they affect how you feel about your life, relationships, and the impact you leave on the world around you.
Starting Down The Path For Future Wealth
FU money indicates greater financial independence, but it’s not the end game.
There are several levels of wealth beyond this. FU money is only the first step.
You need to hit this point to build wealth and achieve goals such as:
- Early retirement
- Legacy wealth
- Philanthropic tasks
FU money paves the way to financial freedom for you and anyone you choose to invest it.
It goes beyond saving money and can affect generational wealth and how you can contribute to those around you.
How To Get FU Money
While not everyone is in the correct position to start saving for their FU fund, everyone can take the first steps needed to get there.
This means that even those working a minimum wage job can set their goals early on and plan for a future that involves FU money.
- Read now: Learn how to survive on $1,000 a month
These steps may seem basic, but they require an objective eye to ensure your efforts pay off.
#1. Determine How Much Money You Need
You need to know how much money you need to reach the point where you can say “FU.”
Start by evaluating your current financial situation, including:
- Monthly bills
- Savings goals
- Potential emergency needs
- Retirement savings
- Your current income
Determine how much you need to fulfill your emergency savings first.
Then you can set a goal for FU money to keep you comfortable in the time beyond that.
#2. Save Money On Big Expenses
You don’t need to make extreme budget cuts, but you should look for areas where you can save money.
Focus on more significant areas like transportation, housing, and groceries.
These areas allow for the possibility of drastically reducing your monthly bills.
For example, if you have owned your house for a long time, you should consider a refinance.
A refinance could slash your monthly payment by a few hundred dollars.
Another option is to question your property taxes.
Call a local real estate lawyer, and they will assess your property taxes.
They will file a claim and represent you if they believe you overpay compared to your neighbors.
If they are successful, you pay them a percent of the savings. If they fail, you owe them nothing.
Your car is another option.
If you have a hefty monthly payment or have a vehicle that costs a lot to maintain or insure, consider buying a more affordable car and save the difference.
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Finally, there are groceries.
While this cost continues to rise, you can do things like meal plan, learn the sales cycles, and be a more intelligent consumer.
- Read now: Here is how to spend less on groceries
#3. Cut Smaller Expenses
More minor expenses add up as well.
Take your cable bill, for example.
Yes, $200 a month is a lot, but it is even more shocking when you look at it annually.
Reducing some of your smaller bills frees up your regular cash flow, allowing you to save more.
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Consider what you don’t use and what you can consolidate.
Even small changes can add up, but you need to put the money saved into a savings account rather than treating it as spending money.
Tools such as rebate apps and loyalty programs can also help you save money when buying necessary items.
You can use these savings to help you reach your goals.
#4. Pay Off Debt
If you have debt, you need to work on paying it off as quickly as possible.
Not only will this increase your cash flow, allowing you to save more money, but it opens the door to retiring early.
For example, suppose you are paying someone else every month. In that case, this only adds to your yearly expenses, making it harder to quit working.
If your monthly debt payment is $500, this comes to $6,000 a year.
By paying off this debt, you need $6,000 less to live.
- Read now: Here is how to get out of debt
The same holds with your mortgage.
If your monthly payment is $1,000, that is $12,000 a year you need to make your mortgage payment.
Pay it off, and you need a lot less money to reach FU financial freedom.
#5. Boost Your Current Income
There is only so much you can do to cut your expenses.
While you can survive and save money on a basic income, in most cases, you want to find new income to supplement your current situation.
New income doesn’t mean earning six figures to have FU money.
You can get there earning a lot less.
But increasing your income does help tremendously.
Increasing your steady income stream helps you achieve financial independence earlier.
Some ideas include:
- Changing jobs
- Asking for a raise
- Picking up a new job
- Looking into the gig economy
One of the most effective ways to do this without increasing your workload is by looking into passive income opportunities.
Passive income can start to cover monthly expenses or yearly expenses without requiring you to lift a finger.
Once you reach your goal, they will continue to feed your savings.
What are some ideas when it comes to passive income?
Investing in dividend-paying stocks or rental real estate are two options.
Selling photography or writing a book are other ideas.
For an activity to be truly passive, you need to make money without the need to be actively involved on a day-to-day basis.
- Read now: Here are the benefits of multiple income streams
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#6. Boost Your Savings Rate
Regardless if you are after short-term FU money or financial independence FU money, you need to focus on your savings rate.
The more money you save, the more it can compound and grow into more significant amounts.
So start with a goal to save 5% of your income.
Then next year, try to increase this to 10%.
Keep increasing until you hit a minimum of 15-20%.
Not everyone can achieve 20%, so at the very least, aim for 15%.
#7. Set Financial Goals
To know exactly how much money you need to save, take some time to create goals.
When would you like to quit your job? How much cash flow would you want every month?
The more detailed your goals are, the more likely you will achieve them.
#8. Invest Your Money
Once you have everything in place and understand how to hold tight to your budget, it is time to start investing in the stock market.
Investing is best done with the help of a financial advisor whose knowledge will guide you in the right direction, but technology and research can help you do this on your own without a financial advisor.
Develop an investment portfolio that can help you reach your long-term goals.
This includes having a retirement account, ideally a Roth IRA.
If your company offers a 401k plan, invest in this as well.
When it comes to the things to invest in, your best option is to invest in low-cost index funds and not sell them.
No matter what the market is doing, you need to hold tight and keep saving money in these investments.
By staying invested, you keep your money working for you and growing.
- Read now: See why emotional investing is bad
Remember that investing is a long game.
You aren’t looking at a few months to create financial independence.
If you do, you will take on more risk than you should and likely end up getting frustrated and losing money.
Finally, investment returns are not guaranteed, and you should never put your general savings here.
Instead, money invested and potential returns should be after you have an emergency fund with ample savings.
#9. Track Your Net Worth
In addition to having goals, tracking your net worth is also encouraged.
Seeing how much wealth you have will motivate you to save more to reach your goals.
After college, my worth just turned positive after paying off some debt.
I wanted a new car, but doing so would turn my net worth negative again.
This was enough of a motivation that I skipped buying the car and continued to save money.
- Read now: Here is how to calculate your net worth
Now that you know what FU money is, it is time to set up a plan to achieve it.
Take a few weeks to determine what you want out of life and how saving money can give you more control.
Then develop a plan to get there.
Remember, you only get one shot at life, so make sure you live it on your terms and not someone else’s.
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I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.