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The Benefits of Financial Independence

As discussed in my previous article on Early Retirement, while I do not pursue early retirement, I am close to or have achieved Financial Independence. Financial Independence, or as some people call FU Money, refers to a situation where you have enough money that a catastrophe no longer worries you. Essentially, you can feel comfortable in taking bigger risks in your career and life simply because you have enough money to weather any storm.

The vast majority of the United States population has little to no money set aside. In fact, recent studies have shown that the average person can not withstand a surprise $400 expense without incurring debt. That’s not only a case of not being financially independent, but also one of not having an emergency fund. You will find I am a big proponent of emergency funds. At minimum, you should always have 3-6 months of your expenses in an easily accessible medium that is not dependent on the stock market. It should be available to tap in case of a lost job, health issue, or other income stall. This is not FU Money, but simply the planning aspect you will also notice as a reoccurring theme on my posts. Failure to Plan will lead to Failure to Succeed.

FU Money is beyond Emergency Fund money. To be frank, if you only have 3-6 months of expenses, you’re going to be feeling the heat if you lose your job. 6 months pass by quickly as I personally can attest to, having been unemployed immediately following college graduation a decade and a half ago. It only lasted 6 months, but by the time I found a job I was financially sweating bullets. I had exhausted my emergency fund and was thus living off fumes. Frankly,  emergency fund money is enough to make you sleep well at night, but not necessarily change your attitude on life and work

Financial Independence meanwhile can be measured not in months, but in years of pay. If you can look at your financial situation and honestly say,” If I lost my job tomorrow, I could be unemployed for the next 5+ years and I’d still be able to maintain my current living standard.”  Then you are able to take more risks with your career and life.

My family just recently took one of these risks by my wife deciding to stay home with our children resulting in a single family income. One of my coworkers did the same thing and he talks to me about sweating bullets because he is the primary wage owner. “What if I lose my job?”, he says. I can attempt to sympathize, but to be honest because I have FU Money I don’t really identify. Studies have shown almost every recession the US has encountered has recovered to its original point within 4 years. My current skill set for work has been widened and deepened far enough that the only true difficulty I would have in finding a job would be during a recession. As such, so long as I exceed 4 years of income in safe money, the impact of a job loss would be the inconvenience of adding years onto my retirement date. The FU money has allowed me to no longer worry about the solvency of my employer or the state of the economy.

Furthermore, because of my financial state I am more likely to speak my mind in situations I don’t agree with at work. I don’t feel worried that I will be walked out and on the street if I say the wrong thing. This has actually helped my career by adding to my confidence. Confidence often times breeds success in the business world as it gives the perception that you know what you’re doing. Frankly, at most companies perception is everything. As such, my financial state begets a higher income.

Finally, the road to financial independence eventually leads to early retirement, if you’re into that sort of thing. Eventually, you will be so safe in your situation that you don’t need to work.

To read more about how to reach financial independence I suggest starting with my article on Saving.

How will/has being financially independent changed your outlook on your career and life?


  1. Mustard Seed Money
    Mustard Seed Money October 10, 2016

    While I never thought of it as F U money. I am financially stable that if I lost my job that I could not work for the next ten years and wouldn’t feel the financial impact.

    That’s amazing that you and your wife have the opportunity to drop down to one income. I know a lot of people that would be envious of your situation.

    • October 11, 2016

      Thanks. I have an upcoming post on the transition. Surprisingly its looking like we won’t see a change in savings rate.

  2. Rob @ Money Nomad
    Rob @ Money Nomad October 10, 2016

    Having the freedom to not worry about money is one of the greatest positions you can be in! Congrats on reaching that point.

    Although not financial independent yet, being able to make a decent living as an online consultant gave me the ability to quit a job that left me reporting to a rather rough boss. While many of my peers were forced to adhere to his requirements because they were frantic for work, I was able to respectfully give my 30 days notice and jump out of there — which was great!

    Once more, congrats and keep up the savings.

  3. MrSLM
    MrSLM October 12, 2016

    What I’ve realized about financial independence is how important it is regardless of your goals to retire or not. Life throws so many curve balls at you: layoffs, illnesses, deaths. Being financially stable enough that you could move across country to care for a dying relative, or dropping down to 1 income temporarily without stress as you have is a goal most people should be striving for.

  4. Santanu
    Santanu October 18, 2016

    I think this is the ultimate thing everyone is looking for. Financial freedom means everything, one can totally concentrate on the quality of life and society, if he/she wants to. many thanks for this article.

  5. Leo T. Ly @
    Leo T. Ly @ January 23, 2017

    I also have the same view on FI and I am actually trying to reach that stage at soon as possible. If I have that amount of money now, I would not work for money going forward, but I would pursue to donate some of my time to charity and work on being an entrepreneur.

    • January 23, 2017

      Sounds like as good a plan as any. Do you have a particular charity in mind?

  6. Ten Factorial Rocks (TFR)
    Ten Factorial Rocks (TFR) April 18, 2017

    FTF, I know this is an older article I am commenting on. I just wanted to add my perspective that I don’t consider having 4 years of living expenses saved as FU Money. In today’s world, where one tweet, one FB post or one bad comment on LinkedIn costs people their present and even future jobs and remains in ‘permanent’ memory of the internet, to truly be able to say ‘FU’ to your boss means you really must be prepared to retire the next day. At the very least, it is 25 x annual expenses in my view. I don’t know if that’s what you were referring in this article that you have but 4x is not FU money in my book.

    • April 19, 2017

      An upcoming post will actually reveal my multiple (the number will stay stealth). It depends on how you measure it, but its a lot higher then 4x.
      The point here was really as a stepping stone to encourage people down the road. 25X seems like a massive number so people just tend to quit when they hear that. The point is even 4x can be a game changer.

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