Money that Allows You to Tell Others to F*ck Off
You've surely heard of the emergency fund, which is supposed to protect us from short-term money shortages. You might also be aware of FIRE – saving up enough money to retire at any age. But have you heard of F*ck You Money?
Lucia Šimonová | Personal finance | 26. October 2022
Our clients often tell us that achieving FIRE (Financial Independence, Retire Early) is not their goal. The most common reason is that they love their jobs, making early retirement an unthinkable option.
Saving up F*ck You Money can be an attractive alternative.
What Is F*ck You Money?
The idea is to save up a sufficient amount of money to live off for a few months or years without going to work. It leaves the door open for people to live their lives more freely.
Unlike FIRE followers, people with this cash reserve prefer to maintain a higher standard of living when they take unpaid time off. Thus, it is a higher amount of money than the emergency fund, with no upper limit.
How Can F*ck You Money Improve Your Life?
Imagine you‘ve been waiting for a raise you believe is deserved for years. You enjoy your work, sometimes stay overtime, and have brought the company attractive projects. Clients and colleagues can't praise you enough.
You've gathered the courage, the track record of your achievements, and the inflation data. You've approached your supervisor and asked for a raise. Despite waiting patiently, the manager still hasn't found a moment to review your request. After sending a reminder, you receive a brief reply, "You're at the maximum, we can't give you more. I hope you won’t find this demotivating."
It will indeed be demotivating, leaving you frustrated. But then you remember you have built up a reserve that allows you to end this dissatisfaction.
This situation is a true story from the life of my friend who was offered the raise he originally requested just 30 minutes after handing in his notice. Without the F*ck You Money, he would still be living in fear of losing his income, which he was dissatisfied with anyway...
What are some other potential uses of this money?
- It will be easier to start a business or switch from the role of an employee to that of an entrepreneur
- You won’t be restricted from quitting your job when you know it will be challenging to find a new one
- You can take a break to requalify for a completely different profession or go back to school
- The reserve will help you in the event of a long-term negative economic development
- You can take a modern sabbatical to prevent burnout or recover from burnout
- You can turn down clients who keep you afloat but you find them difficult to work with
- It will be easier to plan a longer vacation for which you need unpaid time off
- It will prepare you for various situations, such as the birth of a child with whom you want to stay at home for a while
- You won't have to rely on help from the state, family, and friends
Quite simply, this money will allow you to live a certain period, maybe even your whole life, as you wish. You won't have to worry about paying your bills if you feel you want to take time off.
For those of you who aren't afraid of a more expressive explanation of the use of F-you money, you can listen to the definition by the author of The Simple Path to Wealth – JL Collins 😊
How Much Money Do You Need?
Similar to the emergency fund, the suitable amount of F*ck You Money is individual. This simple calculation will help you work out the approximate amount:
- Compute your total annual expenses – housing, food, utilities, children, pets, health insurance...
(e.g. €900 per month x 12 months = €10,800)
- Increase this figure by 10% for unexpected expenses
(in our example €10,800 x 1.1 = €11,880)
- Multiply this figure by the number of years you want to be able to live without working
(e.g. 3 years, so €11,880 x 3 = €35,640)
Any choice is okay, even if you decide to save up F*ck You Money sufficient for just one year. The only thing you should avoid is using your emergency fund or retirement savings for this purpose.
How to Save, Store, and Draw the Money?
The process of saving always involves the same – you need to identify unnecessary expenses, for instance via the Finbot app, create a new budget, have the self-discipline to stick to it, and ideally a short-term side income.
Finbot registration.
Start tracking your expenses today!
Personal finance is always a question of priorities – is personal freedom more important to you than spontaneous purchases of things that are not essential in life?
If you don't need to use the money you've saved right away, it's a good idea to invest it regularly in index ETFs in Finax, letting compound interest multiply the savings. Simply create a wealth-building account and enter your target amount (e.g., €35,000). The questionnaire will display how much you need to deposit to achieve the desired amount. We also recommend setting up a standing order just after your payday.
When you get to the stage where you want to start drawing F*ck You Money, utilize a product like Finax's Intelligent Annuity, which automatically divests the necessary portion of your portfolio each month and sends it to your checking account. The remaining savings will continue to appreciate.
What if You Never Use the F-You Money?
If you don't need the F-You money during your career, you can always save it for retirement. And if the urge to live the ultimate FIRE life suddenly strikes you, these savings can become the first milestone on a journey towards that goal.
Get your personal finance in order with Finbot, and build a reserve that will help you live your dream life.
