How to calculate your financial runway after job loss

The useful number is simpler than a full budget

Financial runway is the number of months your available money can cover your essential monthly shortfall. Start with liquid savings: money you can access quickly without selling a home, cashing out retirement assets, or assuming an investment will hold its value.

Then total only the monthly costs that keep life running: housing, food, utilities, transport, insurance, minimum debt payments, childcare, and support that others rely on. Subtract dependable income that would continue after the job ends.

The basic formula

Monthly net burn equals essential expenses minus reliable ongoing income. Worst case runway equals liquid savings divided by monthly net burn. If reliable ongoing income already covers essentials, savings are not being used and the simple runway is indefinite.

A second scenario can add severance, but only when it is contractual, statutory, already paid, or otherwise realistic enough to model. Until it is in writing and received, use the result without severance for decisions that cannot be reversed.

Make the number honest

• Use the pay that reaches your bank account rather than gross salary when valuing weeks of severance.
• Do not count retirement funds, property, or a car as liquid savings.
• Include annual bills by dividing them into a monthly amount.
• Keep a small allowance for irregular expenses instead of assuming a perfect month.
• Recalculate when severance lands, costs change, or new income starts.

Runway is a planning tool, not an investment forecast

Returns and inflation can matter over a long period, but money you may need soon has a different job from investments held for many years. The calculator can show examples, but it cannot predict markets or tell you where to hold funds. If moving money could create tax, penalty, or investment consequences, get advice for your circumstances.

Even a small emergency reserve can make a financial shock easier to absorb. The right target depends on your costs, obligations, income stability, and access to support rather than a universal number.