A financial freedom expert explains why you should have an 'FU fund' in addition to an emergency fund — and how it helped her quit her job before 40 (2024)

It's an additional financial safety net. Unlike an emergency fund, which is meant to be used for unexpected events (i.e., emergencies), an FU fund is meant to provide the freedom to walk away from an unfulfilling job or take time to think about a career pivot or break a lease without worrying about the financial repercussions. It gives you agency and the choice to evaluate your situation, say "eff this," and start anew.

"The idea is that by having an FU fund, you can maintain your independence and make decisions that prioritize your own well-being rather than feeling trapped in a job or situation due to financial constraints," Souffrant writes in her 2023 book, "Your Journey to Financial Freedom."

How much you need in this fund is a highly personal decision, she added: "For example, one person may feel that they need to have one year's worth of expenses saved up to cover a transition, whereas another person may say they need five years' worth of expenses to cover their lifestyle while taking a break or pursuing something else without having to worry about money."

For Souffrant, she and her husband Woody were preparing to become parents of three. Woody brought in a salary from his full-time teaching job, "so obviously that was very helpful," she noted. But his paycheck alone wasn't enough to cover all their family expenses.

Souffrant set out to save enough where they could cover one year's worth of expenses between Woody's salary and her FU fund. That gave her time to try to monetize her business. If "Journey to Launch" didn't make any money, her family would be financially fine for 12 months.

For about a year, Souffrant decreased her contributions to her retirement savings and investment account to beef up her FU fund, which she kept in a high-yield savings account. That way, the money was still accessible but earning more interest than it would if it was sitting in a traditional savings account. She didn't want to invest it in the stock market, she noted, "since I needed it more for the short term."

Her goal was to accumulate enough savings so that she could quit her day job around the time her daughter was born in May 2018. She took about four months of maternity leave and called her boss a few weeks before her leave ended to tell him she wouldn't return.

The one-year runway she'd built for herself was plenty of time to monetize her business, which she's been growing over the past five years.

Souffrant encourages anyone who is pursuing financial independence to build an FU fund.

"The journey to complete financial independence is long," she said. "You may change your mind about certain things, like I did, or want a change of scenery or career change, and so you want to have the cushion to be able to make those decisions."