F-you money is a synonym for financial independence, and was highlighted beautifully by John Goodman’s character in this scene from the “The Gambler”
Now, most people usually confuse financial independence with early retirement, which I don’t think is always the case. Someone can be financially free yet choose to continue working – but now does so on his terms. Why is it so important to operate from this position? Well, one very big reason has to do with what Charlie Munger calls “Bias from incentives”
Whose bread I eat, his song I sing
The origin of this proverb lies in medieval times, when travelling bards would travel from castle to castle, often staying to entertain the resident noble and his guests in exchange for shelter, coin and food. Naturally, the bard would only play things favourable to the noble’s tastes to ensure he would be fed and compensated well, hence the phrase.
The prevalence of this in modern society takes many forms. For instance, there are people who take up careers not out of interest or passion, but because they offer the best compensation. In India alone, the number of people that have ended up in Engineering or Medicine is testament to this. In the corporate world, subordinates often tell their bosses what they want to hear for better appraisals, and top management manipulates share prices to use their ESOPs. Journalists pander to agendas and media channels spew out attention catching headlines because they want viewers. In fact, the 2007-2008 financial crisis was precipitated by Wall Street incentives that led to some very risky actions, focusing on the short-term and not be the long term consequences.
In all of these cases, the incentives are loaded in favour of actions that aren’t necessarily the best or right course of action. So long as we are dependent on a career or profession for money, our actions will be motivated by those incentives. We may know something is wrong, but often our minds will attempt to deal with the cognitive dissonance by rationalizing it away in some manner by saying for example – “I am only trying to provide for my family”. F-you money allows us to walk away from things we do not believe in and take the road less traveled without fear.