Do You Have Or Do You Need an F U Fund?

By New Year's, I will have saved six months of living expenses. WOO HOO!

It was my next financial goal following debt repayment.

A few years ago, I read a bunch of personal finance blog posts about an F.U. Fund (a liquid cash cushion large enough so you felt comfortable just walking off the job. "F U Boss! PEACE! PS -- I reworded this definition a bit from Tired But Happy's blog).

At the time I read those posts, I was in no place to say that to anybody! I was in debt and changed jobs every 18 months to advance my career. But the thought had intrigued me, since I never much liked getting up every day to go to work anyhow, even when I really liked my job.

Question: What's the difference between an emergency fund, a three-to-six-months-of-living-expenses fund and an F U Fund?

My answer: An emergency fund and a living expenses fund are essentially the same thing. And, technically, so is an F.U. Fund.

But, is walking off the job because you don't like it an emergency? I think it doesn't matter. If you have money saved, it's your money to do whatever the heck you want with it. You want to quit your job and open a cupcake shop? Fine. That's why I wanted to save six months instead of three, which is should be sufficient for most single people. I wanted six months just in case I had to go postal. Whenever I can't take it in the office, thinking about those savings is like stroking a lucky charm -- I don't need it right now, but it's there. And hopefully I'd find what I wanted long before the fund ran out.

Still, there is a lot to be said for patience, temperance and endurance. Being employed with a steady paycheck and health benefits is a blessing. In the midst of a recession, it's a blessing with a capital B. A job is a blessing, but it shouldn't also be a rock tied around your neck. It shouldn't keep you from making big decisions or huge changes.

So, to me, that F.U. fund is the sword to cut yourself loose from the rock, if the need arises.

I guess, then, you can call it what you like. You can have one fund for "emergencies" like an illness, an accident or a family situation and another for up and walking away.

I think the value is in having prepared yourself enough for most eventualities. Can you prepare for an alien invasion or a tsunami or an earthquake in a place that never gets earthquakes? No. Me personally, I wouldn't try. But being without a job or deciding you just want to do something else are not events that should catch you with no plan, no savings, no idea.

My e-fund should cover me, if the need arises. And that feels pretty good.

DH

Comments

[nofeartingthemoney]

For me, they are not the same thing. I know that if I got fired/laid off/had to take time off for illness, there would be some incremental income, so my emergency fund does not have to be as much. Now, the FU fund, for me at least, assumes no incremental income...it's the "I don't need shyt from you, a$$hole! Peace!" money. For me, the FU Fund is a REAL career advantage and I have always tried ot have one. I have seen people stay on a job too long taking crap because they did not have a FU Fund...they were living paycheck-to-paycheck. We all know that crazy bosses and co-workers target easy prey and what prey is easier than those who are desperate to stay because they absolutely can't afford to leave...you can smell the fear on them! I have put more than one semi-crazy boss in check with a simple reference to my "esapce hatch." Nothing like watching a so-called predator back up when he realizes that you are not the easy prey he assumed you to be.

[Tom]

They ought to be different.

IMHO an emergency fund is just that, for short term emergencies, now a FU fund is a fund to facilitate a longer term situation aka a lifestyle change, or peraps a sabatical.

Telling your boss "FU" with only six months worth of living expenses is a high risk strategy. It would be perilous to walk away from a professional job with only six months worth of money if one is hoping to maintain a professional career.

[J. Money]

Love this!!! haha...haven't heard an "FU Fund" in quite some time, thanks for bringing it out.

[Jerry]

LOL! I never read those posts! How did I miss them?! An FU fund sounds just right and something I desperately needed for my last job. I was working because I needed the insurance and other benefits. I didn't feel like I could afford to say "FU!" But, if I had a cushion then it might lead me to feel secure to do it.