Runway is accessible, uncommitted cash divided by the monthly cash shortfall. A credit limit and a long-term market forecast are not cash reserves.
Start with money you can actually use
List accessible cash, then subtract known commitments that will be funded separately. In this fictional example MYR36,000 includes MYR6,000 earmarked for existing bills, so the income-loss pot starts at MYR30,000. Do not include a property valuation, unused credit or an account you cannot yet withdraw.
If you deliberately release a previous reserve for a different purpose, the original obligation still needs a new plan. Moving a label does not cancel a bill. The example is a budget exercise, not advice to resign or to liquidate an investment.
Make an income-loss budget, not an ideal budget
Assume unavoidable monthly spending is MYR4,000. Expected unavoidable future annual costs add MYR6,000 per year, or MYR500 per month, making the working budget MYR4,500. These future costs are different from the MYR6,000 already earmarked above; they are not charged twice.
Use a dated cash schedule if bills are clustered. An averaged MYR500 helps compare scenarios but cannot pay a MYR6,000 bill tomorrow. Include minimum debt payments, essential protection costs and dependants. Exclude only spending that you really could stop, after checking notice periods and penalties.
Background source: CFPB: emergency savings principles (US background, not Malaysian rules)
Calculate the shortfall and the months
With no continuing income, MYR30,000 ÷ MYR4,500 = 6.67 months approximately. If dependable after-cost income of MYR1,500 continues, the monthly shortfall becomes MYR3,000 and the simple runway becomes 10 months. Treat that income as an assumption to verify, not money guaranteed by a side-hustle idea.
The formula holds spending and income constant, ignores interest, inflation, tax changes and payment timing, and stops at cash exhaustion. A result of 6.67 months is not a safe date to wait until before seeking income. Search and hiring can take longer than expected.
| Scenario | Monthly shortfall | Approximate months |
|---|---|---|
| MYR30,000; no income | MYR4,500 | 6.67 |
| MYR30,000; MYR1,500 income | MYR3,000 | 10.00 |
| MYR26,000 after repair; no income | MYR4,500 | 5.78 |
| MYR26,000 after repair; MYR1,500 income | MYR3,000 | 8.67 |
| MYR30,000; costs rise 10% | MYR4,950 | 6.06 |
Add a shock before celebrating the result
An immediate MYR4,000 repair reduces the pot to MYR26,000. Without continuing income, runway falls to 5.78 months. With the MYR1,500 income assumption, it becomes 8.67 months. Both outcomes use the same MYR4,500 spending budget.
A different scenario is essential costs rising 10% to MYR4,950 while the pot stays MYR30,000. That gives about 6.06 months without income. These are separate stress cases; if both happen, combine them explicitly rather than choosing the most comfortable result.
Set an early action point
Choose a cash level that triggers a budget review, conversations with lenders or an income search. The right level depends on your obligations and realistic alternatives; this article supplies no universal number of months. Do not wait for an account to reach zero to discover that cancellation takes another billing cycle.
Write which expenses can fall immediately, which need notice and which cannot change. Add dates for known payments. Keep any expected severance or benefit outside the base case until eligibility, timing and net amount have been established.
Keep the estimate useful as life changes
Update the pot after a large payment and update the shortfall when income changes. A previously available MYR1,500 can disappear; a new job can add commuting or childcare costs. Only the net improvement extends the runway.
Use the cashflow planner for categories and the bill planner for dates, then keep a separate copy of this worksheet. Their balances are planning records, not a bank connection. Check cash against statements and avoid allocating the same reserve to two goals.
Download the worksheet
Put it into practice
Build the income-loss budget separately from an ordinary working month.
Open the cashflow planner