Key Takeaways
- Your runway number drives every decision
- Calculate both "comfortable" and "survival" scenarios
- This is temporary planning, not permanent reality
Your Most Important Number
"How long can I survive without a job?" — Let's calculate it.
The Runway Formula
Available Cash
+ Severance (after tax)
+ Unemployment Benefits (after tax)
─────────────────────────────
÷ Monthly Minimum Expenses
═════════════════════════════
= Months of Runway
Step 1: Calculate Available Cash
| Source | Amount |
|---|---|
| Checking accounts | $ |
| Savings accounts | $ |
| Money market | $ |
| CDs (accessible) | $ |
| Total Available | $ |
Don't include: Retirement accounts (401k, IRA), home equity, taxable investments you don't want to sell.
Step 2: Estimate Income
| Source | Monthly | After Tax |
|---|---|---|
| Severance | $ | $ |
| Unemployment | $ | $ |
| Spouse income | $ | $ |
| Side income | $ | $ |
| Total Monthly Income | $ |
Step 3: Calculate Minimum Expenses
| Category | Current | "Survival" |
|---|---|---|
| Housing (mortgage/rent) | $ | $ |
| Health insurance | $ | $ |
| Food/groceries | $ | $ |
| Utilities | $ | $ |
| Minimum debt payments | $ | $ |
| Transportation | $ | $ |
| Insurance (auto, etc.) | $ | $ |
| Phone/internet | $ | $ |
| Total | $ | $ |
Step 4: Calculate Runway
Example:
| Amount | |
|---|---|
| Savings | $40,000 |
| + Severance (after tax) | $20,000 |
| + 6 months unemployment | $12,000 |
| Total Resources | $72,000 |
| ÷ Monthly expenses | $6,000 |
| = Runway | 12 months |
Two Budgets: Comfortable vs. Survival
Calculate your runway under two scenarios:
| Scenario | Monthly Spend | Runway |
|---|---|---|
| Comfortable | Current lifestyle | X months |
| Survival | Bare minimum | Y months |
The gap between these is your flexibility zone. If things get tight, you can extend runway by moving toward "survival" spending.
Why This Number Matters
Your runway affects every decision:
| Runway | Strategy |
|---|---|
| 12+ months | Can be selective, focus on right fit |
| 6-12 months | Active search, some flexibility |
| 3-6 months | Urgent search, expand criteria |
| Under 3 months | Take reasonable offers, can upgrade later |
The Job Search Math (2025 Reality)
| Metric | Reality |
|---|---|
| Average job search duration | 5-6 months |
| Applicants sending 50+ applications | 53% |
| Applicants sending 100+ applications | 20% |
| Application to interview rate | 2-5% |
| Interview to offer rate | 20-30% |
Translation: Most job seekers apply to dozens of jobs. If you apply to 100 jobs, you might get 2-5 interviews, and potentially 1 offer. Your runway needs to account for this reality.
Knowing your number removes fear of the unknown. Now you're dealing with facts, not anxiety.
When calculating your financial runway, which of these should generally NOT be included in "available cash"?