Nassim Taleb and the Concept of ‘F#$k You Money’

Imagine this – The typical salaried employee trots off to work at the beginning of the week.

The Teacher steps into class and begins to share her knowledge. The Engineer begins to work at ensuring the bridge he is building stays up. The Account Manager takes on a particularly complex project with an highly demanding client. The Auditor hunkers down to ensure legitimacy in the clients books.

They get through the day, tired but happy. And the day after. This week is looking good. And then comes wednesday, when the shit hits the fan.

Teacher gets to school and her Principal informs her that she has just been transferred to another department from next semester onwards and she has to take on a totally new portfolio. It will involve a lot less teaching and a lot more administrative work. She tries to reason but is told that the move is non-negotiable. She dreads it and seriously contemplates leaving.

Engineer gets to site and discovers that his lead engineer has taken credit for his cost saving ideas, one that he has spent six months working on. On top of that, he has been discredited with being incompetent on his current project. He is devastated and seriously contemplates leaving.

Account Manager has reached the end of her tether with the client. In the most obnoxious and suggestive manner possible, he has been demanding her time after work for dinner. He went as far as to suggest that his continued business for the firm lies on her willingness to spend time off work with him. Account manager bought up the issue to her boss, only to be urged to do what is best for the company and her career. She is confused and seriously contemplates leaving.

Auditor has just unearthed some irregularities in the accounts that is serious enough to warrant police intervention. He bought it up and was told to keep it hush hush. Similar to Account Manager, his livelihood is at stake if he chooses not to comply. He is torn and seriously contemplates leaving.

How would you react?

How do you think each of our four friends would react to their unique situations? How would you react if you are in the situation yourself?

I have an inkling that how each individual reacts would really depend on their financial situation. If finances are a constraint, there is little option but to keep at the job and make compromises here and there. If there are mortgages to be paid, kids to be fed, aging parents to take care of, it is very difficult to drop everything and move on. These are responsibilities that come with being an adult.

On the other hand, if finances are not part of the consideration and the job gets really miserable, I believe that our friends would behave in a very different manner. They would have little incentive to continue wading in the misery. The decision to leave their jobs would be a much easier one to make.

F#$k You Money

Which brings us to the concept of F#$k You Money (FUM). Nassim Taleb defines it in his 2007 bestseller The Black Swan as

‘the amount of money you need to have before you can say ‘F#$k You’ to your superior before you hang up the phone’

Simply put, it is money you have in the bank that allows you to do anything you want. Even more tellingly, it is money you have in the bank that allows you to do nothing you do NOT want.

It goes beyond the mandatory six months of emergency fund that any prudent person should have. The emergency fund covers you should you lose your job unwillingly. FUM goes above and beyond. It allows you to lose your job willingly should you choose to.

It is the money that allows you freedom to do what you like, without having to compromise on your life choices.

It is like a nuclear warhead that you have built. You don’t necessarily want to use it. You just want to have it. The nuke keeps enemies at bay. It is a very comforting thought.

How much is enough?

There has been many discussion about how much one requires before the money is considered sufficient. Some place the figure at one million. Others put it at ten. Yet there are pockets who subscribe to the more traditional definition of financial freedom, where passive income exceeds expenses.

Personally, I think the point is moot. Every one has a different price point. Every one has different standards to upkeep. Every one is comfortable at different levels. The more pertinent question really is – How to accumulate FUM.

How to accumulate FUM?

Simply holding down a job and saving part of your income is insufficient.

We all know inflation erodes away the dollar value of money. The dollar you save today would be worth a fraction of its value in the future. The days of keeping money in a biscuit tin under the mattress are over.

On top of saving, we also need to put in place a strategy to grow our money. The least we must do is to ensure that our savings beat inflation. It is all about making our money work harder for us. Have a plan in place, and we are on our way to accumulate some serious FUM.