Pretend your life is like flying on an airplane.
Maybe you feel like your airplane is a fighter jet, moving too fast to enjoy the ride. Maybe your airplane is a small regional carrier, boringly flying back and forth between the same two airports.
For whatever reason, you decide you need to get off this airplane. You decide to take control and make a change. You’re ready to jump.
All you need is a parachute.
You have a choice between the only two parachutes on the plane.
The first parachute has only one string (or line) connecting the canopy to the harness . You think to yourself, “This doesn’t seem very safe. What if that one string breaks? That would end very badly for me.”
Then, you look at the second parachute. This parachute has 10 strings. You say to yourself, “OK, this one looks much safer. If one string breaks, the parachute still has nine other strings to keep me safe. Even if something goes wrong with one or two strings, I would glide safely to the ground.”
It’s obvious which one of these parachutes to choose.
This situation illustrates what I believe is one of the most empowering concepts in personal finance.
It’s what I call “Parachute Money.”
Before we move on to our next core personal finance topic, credit and debt, let’s take a few minutes to discuss this powerful money concept.
What is Parachute Money?
The central idea of Parachute Money is to create multiple sources of income so you are not beholden to any one source.
Parachute Money includes your primary job, any side hustles, any income generating assets, and your emergency savings account. It also includes the income of your significant other, if you share finances.
With Parachute Money, if one of your sources of income dries up, you are more than covered with your other sources.
Picture each source of income as a string on your parachute. The more strings on the parachute, the stronger it is. Likewise, the more sources of income you have, the stronger your personal finances are.
Note that multiple sources of income does not have to mean multiple jobs. Even with one job, you can still pursue additional, or stronger, parachute strings.
Let’s say you earn a salary and also could earn commissions or bonuses. Each one of those income streams could be another string in your parachute.
Or, you could prioritize boosting your emergency savings even more than you normally would. You might even consider a separate savings bucket called “Parachute Money.” Besides boosting your savings, you could also focus on passive income streams, like investing in dividend stocks.
The central idea remains the same. Protect yourself with as many income sources as you can.
Think of Parachute Money as a way to visualize financial independence.
Think of Parachute Money as a way to visualize what financial independence really means.
Parachute Money empowers you to confidently make big life changes. When you have Parachute Money, you are financially free to control your life, not the other way around.
Parachute Money is all about your intentional decisions. It’s for when you’ve decided, on your terms, that you’re ready to make that big change in your life. You’re excited to take matters into your own hands, but you don’t want to disrupt your entire life in the process.
To return to our airplane analogy, you could stay on the plane if you wanted. Nobody is forcing you to jump. But, you’re ready for something different. And when you do jump, you want a parachute that will help you land as safely as possible.
That’s what Parachute Money can do for your life. It allows you to make that leap while landing gracefully.
You could say it out loud like this, “I have Parachute Money. I am financially independent because I am not beholden to any single source of income. If one source of income goes away, because I’ve decided it’s time for a change, my other sources of income will protect me.”
Parachute Money is more than just emergency savings.
Parachute Money is more than just a bank account. We’ve talked about how an emergency savings account is the first savings account that everyone needs.
An emergency savings account is part of your Parachute Money, but there’s more to it.
Recall that an emergency savings account is what you turn to when life dictates your choices. If you unexpectedly lose your job or have a large bill to pay, emergency savings will keep you afloat. You didn’t choose for these things to happen, but you still need to be prepared.
So, emergency savings are for protecting yourself and your family from the unexpected. Like we talked about above, Parachute Money is about you dictating the course of events, not the other away around.
What are my current parachute strings?
My wife and I have worked hard to create multiple sources of income. We currently have the following strings in our parachute, in no particular order:
- My primary job as a mesothelioma attorney
- My wife’s primary job as an attorney
- Rental Property 1
- Rental Property 2
- Rental Property 3
- Rental Property 4
- Law School Professor
- Emergency Savings
Combined, these sources of money provide a solid parachute for us.
If you wanted to, you can break out some of these sources of income into further parachute strings.
For example, Rental Property 1 consists of 4 apartments. Each apartment could be a separate string. I teach multiple law school courses; each course could be another string. Like we talked about above, your job may include a salary, commissions, and bonuses. Each could be a separate parachute string.
What are some situations where Parachute Money can make big decisions easier?
Let’s look at three possible situations where Parachute Money can empower you to make the best choices for you and your family.
1. It’s time for a new job.
After working for the same company for 10 years, life around the office looks different.
Your direct supervisor left for a new job. You were passed up to take her place. New policies are rolling out, including a requirement to be in the office five days per week.
You feel stuck in place. You still like your job and most of the people you work with. And, you could hang around for the steady paycheck.
Or, you can take control and make a change. If you have Parachute Money, you can take your time looking for a new job that matches your priorities. Maybe you decide not to go back to full-time work at all.
2. It’s time to move.
You live with a roommate and have another 10 months on your lease. Things have gotten uncomfortable.
He doesn’t clean up after himself. He stays up late watching movies so loud you can’t sleep. He eats your favorite leftover Thai food you had saved for lunch the next day.
You could “tough it out.” He’s still a good friend of yours.
Or, you can take control and make a change. If you have Parachute Money, you can handle the costs of breaking the lease and finding a new apartment.
3. It’s time to stop depending on your parents.
You’re a full-grown adult and are still financially dependent on your parents.
Sure, the money is nice to have.
The problem is your parents have let it be known, in so many words, that they are to be consulted on how you spend their money.
You may think you are choosing where to live or where to send your kids to school. Deep down? You know your parents will have the final word.
You can continue letting your parents dictate your life.
Or, you can take control and make a change. If you have Parachute Money, you can tell your parents, “Thanks, but no thanks.”
Parachute Money gives you control.
These are just a few examples of how Parachute Money allows you to regain control of your life.
Notice that in each situation, you’re not dealing with a sudden emergency. Instead, you’ve reached a tipping point and decided it was time for a change. Without Parachute Money, your options would be limited.
In our example above about wanting a new job, Parachute Money allows you to make that leap. You may temporarily be without your primary source of income- that string on the parachute broke.
But, you’ll be more than fine because you have other parachute strings to land you safely, like an emergency savings account, a side hustle as a ghost writer for a blog, and a rental property.
Parachute Money is one of my favorite personal finance concepts.
Parachute Money is one of my favorite concepts in personal finance. I first learned about the general idea from J L Collins in his renowned book on investing, The Simple Path to Wealth: Your road map to financial independence and a rich, free life.
The Simple Path to Wealth is a must read for anyone wanting to learn the power of investing on your own through index funds.
We’ll have plenty more to say about how Collins has influenced my own decisions in our investing series. I credit him for teaching me that investing does not have to be hard. It’s actually pretty simple if you follow his tips.
To learn more from J L Collins, check out his website here.
In his book and blog, Collins describes what he calls “F-You Money.” He tells the story of getting in a shouting match with his boss one day at work, shortly before walking away from that company. As Collins explains, nobody deserved an “F-You” more than that guy.
In Collins’ example, he had enough money saved up where he could say those choice words to his boss. His “F-You Money” empowered him to live on his own terms.
On your way to financial independence, don’t ignore Parachute Money.
The reason I love the idea of Parachute Money is because it encapsulates so many of the money wellness habits and goals we’re striving for with Think and Talk Money.
Parachute Money gives you flexibility and control. When you have multiple sources of money, you are not beholden to any one source.
Think back to the image of the parachute with only one string. What happens if that one string breaks?
Likewise, what happens if your only source of money no longer fits into your best life?
As you think about these questions, picture yourself jumping out of the airplane.
What parachute are you reaching for?
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© 2025 Matthew Adair