Cash runway maths

The first weekend after my redundancy, I sat at the kitchen table and worked out, on a single sheet of paper, how long I could wait. The number was both better and worse than I had assumed. Better because I had been catastrophising. Worse because I had been ignoring how much our family burned through each month on things I could not name.

Runway maths is not budgeting. It is a different exercise. Budgeting is for steady state. Runway is for siege.

The single equation

Runway (months) = (Net payout + Cash on hand + Liquid investments) / Monthly burn rate

That is the headline. Now the honest version.

The net payout is the post-tax figure that lands in your account, not the gross on the offer letter. The monthly burn rate is what you actually spend, not what you tell yourself you spend. Pull the last three months of bank statements (yours, your partner's, the joint account) and sum it. Divide by three. That is burn.

Most men, doing this for the first time, find their burn is 20-40% higher than their estimate. Subscriptions, takeaway, fuel, kids' activities, the random Bunnings runs. The number is the number.

The siege multiplier

Whatever runway you calculated, halve it.

Why: you will get an offer slower than you think, the first one will fall through, the start date will get pushed, and something will break in the house that needs fixing. Always.

If your headline runway is 12 months, plan as if you have 6. If it is 6, plan as if you have 3. The siege multiplier is not pessimism, it is realism with a buffer.

The 90-day budget, three columns

Take a piece of paper or a spreadsheet. Three columns:

• Must-pay (no choice, defaults if missed): mortgage or rent, utilities, insurance, basic groceries, school fees, medication, minimum loan repayments, child support, car rego if it is up
• Can-defer (a phone call moves it): credit card minimums vs. full balance, ATO BAS payments, gym memberships you signed for a year, private health (downgrade tier instead of cancel)
• Can-stop (this week, no apology): streaming you do not watch, the third coffee subscription, restaurant delivery, the wine subscription you forgot you had, gardener if you can lift a mower, cleaner if you have time

The cuts in column three should happen in week one. Not month three. Early cuts compound. A $400/month spend stopped in April is $2,400 you have by October that you would not have had if you waited until July to cut it.

The conversations to have first

Before you cut anything fancy, make four phone calls. They take 20 minutes each.

• Mortgage lender: request a hardship variation, interest-only for 6 months, or a repayment pause. They have a hardship team. Use the word "hardship".
• Insurer (home, car, health): ask for a premium freeze, or to move to monthly payments if you are on annual
• ATO: if you have a tax debt or are paying off a previous BAS, request a payment plan extension
• Utility providers: ask for the hardship rate, ask if you qualify for any state-based concession on the back of your changed circumstances

These calls are awkward for about thirty seconds. After that they are surprisingly normal, the staff handle this every day, and the discounts on offer are real. I knocked $600/month off our fixed costs in one Saturday morning of phone calls.

Centrelink, the bit nobody loves talking about

JobSeeker exists. You may be entitled to it. The catch: if you received a genuine redundancy payment, the Income Maintenance Period (IMP) applies, which means your payout is treated as if it covers your living costs for a number of weeks before payments kick in. The waiting period is roughly your payout divided by your weekly wage, capped at a year.

So if you got 26 weeks of pay as a redundancy lump sum, you typically wait 26 weeks before JobSeeker starts. Apply early anyway. The application takes a while to process and the clock starts when you apply, not when you become eligible.

You may also qualify for Family Tax Benefit, Health Care Card, or Rent Assistance depending on your situation. The Services Australia website is dense but the eligibility tools are decent. Half an hour of clicking, worst case you find out you do not qualify.

The separate account trick

Move the redundancy payout to a separate high-interest savings account. Not your offset, not your everyday. A separate account, ideally at a different bank so you cannot tap it from your phone in two clicks.

Pay yourself a monthly "salary" out of that account into your everyday, equal to your reduced burn rate. This does two things:

• Stops the lump sum looking like Christmas money (you will spend more without realising)
• Gives you a real-time runway gauge (the savings balance shrinks predictably, the day it hits zero is your real deadline)

The separation is psychological more than financial. It works because of that, not despite it.

The 90-day check-in

At day 30, day 60 and day 90, you sit down for an hour and rerun the maths. New burn rate (it changes), new runway, new cuts if needed. This is not anxiety, this is maintenance.

What you are looking for, each time:

• Is my actual burn matching my planned burn?
• Are there new costs sneaking in (medical, dental, school, car)?
• Is my partner's spending in step with the plan, or am I budgeting for one?
• Has anything in column two slipped into column one?
• What is my new realistic runway, halved?

If runway is shrinking faster than expected, you cut. If runway is steady, you keep going. If runway is growing (you found contract work, your partner picked up extra hours), you breathe but you do not relax the cuts yet.

The thing about the partner conversation

This is the budget meeting men avoid because they think it sounds like failure. It does not. It sounds like a couple making decisions with information.

Print the spreadsheet. Sit down. Walk through the three columns together. Agree the cuts together. The worst version of this is one person making the decisions silently and resenting the other for not noticing. The best version is one shared sheet, two signatures (figurative), and a check-in date in the calendar.

Money in. Money out. Months left.

The lump sum trap

When the redundancy money lands, it will look like more cash than you have ever seen in one place. It is not. It is 6-12 months of salary, paid up front, taxed concessionally, and it has to last.

Three traps to avoid in the first month:

• The car upgrade you have been eyeing (it can wait)
• Paying down the mortgage in a single hit (counter-intuitive, but you want liquidity, not equity, in a job search)
• Helping out a family member with a chunk of it (generous, premature, hard to claw back)

The right move with the lump sum: move it to the separate account, salary yourself monthly, and only consider lump-sum decisions (mortgage paydown, investment, family help) once you have a new role and a fresh runway calculation. Six months minimum. Patience is cheaper than regret.

Further watching

• Your Budget Won't Work Without Doing This (16:08)
• 5 Frugal Habits to Cut Your Expenses in Half (9:09)