How to calculate your financial runway after job loss

Start with four numbers

Financial runway is the number of months your available money can cover your essential bills after income changes.

Start with four numbers: money you can access quickly, essential monthly costs, reliable income that will continue, and any realistic severance. Do not count a home, retirement money, or an investment that you may need to sell at a bad time.

Use two simple views

Monthly shortfall is essential costs minus reliable ongoing income. Your basic runway is available savings divided by that shortfall. If ongoing income covers your essential costs, the simple model returns an indefinite runway because your savings are not being used.

You can also view a result with severance. Use it only when the amount is written, paid, or realistic enough to plan around. Until then, use the result without severance for important decisions.

Make the estimate honest

• Use the amount that reaches your bank account when estimating severance.
• Include annual bills as a monthly amount.
• Include a little room for irregular costs.
• Review the number when costs, severance, or income changes.

What the number means

Runway is a planning estimate, not a promise. Costs can change, income can start or stop, and markets can fall. Money you may need soon has a different job from money invested for many years.

Your useful target depends on your costs, dependents, debt, income stability, visa limits, and support. If moving money could create a tax, penalty, or investment problem, get advice for your situation.

Review it often

Recalculate when your job situation changes, a severance payment arrives, a bill changes, or new income starts. A clear number can help you decide what to do now without pretending that the future is certain.