The math behind the free calculator
How to calculate
your cash runway.
One division.
The formula, with an example.
The four checks our free calculator runs.
Cash runway is how long the cash you can reach would cover your must-pay bills if your paycheck stopped. You can work it out with one division. This page shows the formula, an example, and the four checks our free calculator runs.
The formula
One division.
Three numbers.
You need three numbers. The cash you could use within two days. Your must-pay bills for one month. Any monthly income that would keep coming in if your main paycheck stopped.
A month is counted as 30.44 days. That is 365.25 days ÷ 12. If the income that keeps coming covers the bills, there is no gap, and the cash is not drawn down in the example.
What counts in each number
- Cash: money you could use within two days. Home value, retirement accounts, and company stock are left out
- Bills: what you must pay each month, with health coverage added if your bills don’t already include it
- Income that keeps coming: take-home income that would continue without your main paycheck. Use 0 if there is none
An example with made-up numbers
$20,000 in cash.
$6,600 in monthly bills.
Say a household has $20,000 it can reach and $6,600 in must-pay bills each month. No other income would keep coming in.
Now add $1,500 a month for health coverage the household would pay itself. Bills rise to $8,100. $20,000 ÷ $8,100 ≈ 2.47 months, or about 75 days. One added bill moved the answer by 17 days.
Then try a change. Cutting $500 from the $6,600 in bills leaves $6,100. $20,000 ÷ $6,100 ≈ 3.28 months, or about 100 days.
These numbers are made up to show the arithmetic. They do not predict what will happen to you, and your result depends on what you enter.
The cash risk score
Four checks.
Each scores 0, 5 or 10.
The calculator also runs four rough checks on your answers. Higher means more exposed. The score is the average of the four, rounded to a whole number.
| Check | 0 points | 5 points | 10 points |
|---|---|---|---|
| Cash ÷ monthly bills | 6 months or more | 3 to under 6 months | Under 3 months |
| Bills ÷ take-home pay | 50% or less | Above 50%, up to 70% | Above 70% |
| Debt outside your mortgage ÷ a year of take-home pay | 15% or less | Above 15%, up to 35% | Above 35% |
| Sources of income | 3 or more | 2 | 0 or 1 |
The first check uses your bills before any income that would keep coming in.
The same example, scored
Add three more made-up numbers: $10,000 in monthly take-home pay, $16,500 in debt outside the mortgage, and one source of income.
A score of 5 falls in the Exposed band. The bands are 0 to 2 Resilient, 3 to 4 Watch, 5 to 7 Exposed, and 8 to 10 Critical.
One more rule applies. If your cash covers under one month of bills, the score can’t go below 7.
We chose these cut-offs. No government agency or other institution set them or endorses them.
What this math leaves out.
The calculator counts only what you enter. It leaves out the value of your home, retirement accounts, and company stock. It also leaves out future raises, severance, unemployment benefits, and how easy jobs are to find in your field.
It does not guess how long a job search takes. The 3, 6 and 9 month planning periods are your choice.
The cash number is most useful while you still have a paycheck. For the other half of the question, what’s changing at work, see 18 Signs You’re About to Be Laid Off, a $27 guide with a tracking checklist.
Two related pages: how much COBRA costs per month and six layoff signs anyone can check.
A few things to know.
What is cash runway?
It is how long the cash you can reach would cover your must-pay bills with no paycheck. The calculator shows it in days and months.
Does the calculator count retirement accounts?
No. It counts cash you could use within two days. Home value, retirement accounts, and company stock are left out of this check.
Does it include severance or unemployment benefits?
No. Neither is counted unless you enter it yourself as income that would keep coming in. Whether you receive either one depends on your situation.
Is the score a prediction?
No. It is four rough checks on the numbers you enter today. It cannot predict a layoff or how long a job search takes.
Is the calculator really free?
Yes. It takes five questions and needs no email. Your numbers stay on your device. It gives an estimate you can review, not advice.
Run it with
your own numbers.
Five questions. No email. Then try a few changes and see what gives you more time.
Try the free calculator