On this sheet · 3 parts
1The calculation
Runway is savings you could genuinely use, divided by what a month actually costs you. That is the whole thing.
Do it with your costs, not your salary. If you have never done it precisely, expect the number to move.
2The three mistakes
- Counting gross income instead of costs. Planning to replace a salary when your essentials come to half of it is planning for a different and much harder problem than the one you actually have.
- Forgetting that leaving removes costs too. Commuting, parking, work clothes, the lunches, sometimes childcare hours. It is not a huge number, but it is real and it is almost always missed.
- Counting money you would never actually spend. A pension is not runway. Neither is the amount you would not go below under any circumstances — subtract that first and calculate on what is left, so the figure is one you would really act on.
3What to do with the number
Runway is not permission to leave. It is how long you have to gather evidence, and evidence is what makes leaving a decision rather than a leap.
If the number surprised you upwards, the useful next question is not when do I go. It is what would I need to see first.
BYE members get a tool that works this out with tax and a safety margin, and shows conservative, balanced and lean side by side. The worksheet above is enough to know roughly where you stand.
General information to help you think things through. Not regulated financial, legal or tax advice.