If I lose my job today, how many months can I survive on my savings?
No Sign-Up. No Paywall.
A job loss does not stop your EMIs, your rent or your insurance premiums. This model runs your actual balance down month by month so you can see the date it hits zero, not a rule of thumb.
Why the Six-Month Rule Fails Most People
The standard advice is to keep six months of expenses in cash. It is a reasonable starting point and a poor answer, because it silently assumes two things that are usually false: that your outgo equals your living expenses, and that you have no income at all during the gap.
For most salaried Indians the second-largest monthly outflow after essentials is loan repayment, and lenders do not pause EMIs because you lost a job. A person spending ₹40,000 a month on living costs and ₹35,000 on a home loan EMI does not need six months of ₹40,000. They need six months of ₹75,000, which is almost double the number the rule of thumb produces.
The offsetting factor is that very few people go to zero income. Notice pay, a final settlement, leave encashment, a working spouse, freelance work or rental income all extend the runway. The model below takes both sides, drains the balance month by month at your real net burn, and tells you the month it runs out.
Your Runway Model
How to Read Your Runway
The headline number is months, not rupees, because months are what you negotiate with. A runway of 4.2 months means you can afford a search that takes four months and a bit. It does not mean you should plan for a four-month search, because the distribution of job-search times has a long right tail and the cost of running out is not proportionate to the shortfall. Running out at month five means selling investments at whatever price the market offers that week, or borrowing at credit-card rates, which is how a temporary income gap becomes a permanent balance-sheet problem.
The net monthly burn line is the number to attack. Runway is savings divided by burn, so a rupee cut from monthly burn is worth far more than a rupee added to savings once. Cutting ₹5,000 a month from a ₹75,000 burn adds roughly half a month of runway for every ₹6 lakh of savings you hold, permanently, and it keeps working after you are employed again.
The model earns a return on the cash while it drains, which is why the runway is slightly longer than a simple division. Keep that return assumption modest. Money you might need in month three should be in a sweep-in deposit or a liquid fund, not in equity, and the difference between 4 percent and 7 percent on a six-month horizon is a rounding error next to the difference between liquid and illiquid.
What Changes the Answer
Whether your EMIs can be paused
A lender may allow a short moratorium or a tenure extension on a home loan, which drops the EMI line sharply for the duration. Interest keeps accruing, so this buys runway at a price. Credit card and personal loan balances almost never get this treatment, which is why they are the first thing to clear.
Health insurance you do not own
If your cover is employer-provided, it stops with the job, usually at the worst possible time. A separate personal policy costs a small fixed premium and removes the single largest tail risk from this model. An uninsured hospitalisation can consume an entire runway in one week.
The quality of the continuing income
Freelance or spouse income entered here is treated as certain. If it is variable, run the model twice, once at the realistic figure and once at zero, and treat the gap between the two runways as the size of the risk you are carrying.
Where the money is parked
Savings held in an equity mutual fund are not a runway. A 25 percent drawdown at the moment you need the money turns six months of cover into four and a half. For anything you may need inside a year, the correct return assumption is the one you can actually realise on demand.
How We Calculated This
The Decision Framework
Frequently Asked Questions
Should EMIs count towards my emergency fund target?+
How many months should I actually target?+
Does my provident fund count as emergency savings?+
Is it better to hold cash or clear a loan first?+
Where should the emergency fund sit?+
What if my income during the gap is uncertain?+
Sources and Method References
- Reserve Bank of India — household savings and deposit rate publications
- EPFO — rules on advance and final withdrawal during unemployment
- IRDAI — health insurance portability and individual cover rules
The concept behind the number
This scenario gives you a figure. These pages give you the idea it comes from, the words on the inputs, and the article that works through the decision.