How long can my savings cover expenses?

Definitions

Accessible cash is money available to meet payments in the period being modeled. Net cash burn is payments minus receipts. Gross-expense coverage assumes no income; net-burn runway includes continuing income. Do not count a home, uncertain sale proceeds or unused borrowing as cash.

Worked example: continuing part-time income

With 12,000 of accessible cash, expenses of 3,000 a month and reliable after-tax income of 1,000, the monthly shortfall is 2,000 and simple runway is six months. With no income, the same cash covers four months of those expenses. A one-off 2,000 repair reduces starting cash to 10,000 and net-burn runway to five months.

Formula and assumptions

Net-burn runway = cash / (monthly payments − monthly receipts), when payments exceed receipts. Gross coverage = cash / monthly expenses. Values assume constant monthly timing, no interest, no taxes beyond the stated after-tax income and no reserve excluded from spending.

Limitations and next checks

If receipts cover payments, this formula does not identify a depletion date; it does not mean the household faces no liquidity risk. Model bill timing, uncertain earnings and annual payments separately. Keep any reserve you choose not to spend outside the available-cash amount.

Sources and scope

The CFPB describes an emergency fund as cash reserved for unexpected costs and emphasizes managing cash-flow timing. It does not prescribe the example runway as an appropriate target for every household.

• CFPB: building an emergency fund

Sources checked October 30, 2026. Examples use generic currency units. Educational information, not personal financial, tax or legal advice. Seek qualified advice for decisions specific to your circumstances.

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