Laid Off or Between Jobs? Here's How to Work Out Your Financial Runway

G'day, friends. Bob here, and today I want to talk about something a lot of people are dealing with right now — and I want to do it gently, because if you're reading this after a layoff, you've had a rough week. First things first: a layoff is a reflection of company budgets and broader economics, not your worth or your work. Right, now that's said, let's do what I do best — turn a scary, foggy situation into a few clear numbers you can actually act on.

2026 has been a brutal year on the jobs front. More than 142,000 tech workers were laid off in just the first five months, and a lot of it is companies redirecting payroll into AI. Whole industries are “restructuring.” If that's you, or you're worried it might be, the single most powerful thing you can do isn't panic — it's work out your runway.

What Is a “Financial Runway”?

“Runway” is a word pinched from startups, who use it to mean “how long until we run out of cash.” For a household, it's the same beautifully simple idea: how many months can your savings cover your essential spending if your income drops or stops?

That's it. That's the number that turns “oh no, what do we do” into “right, we have X months — here's the plan.” It's the difference between flailing and steering. And it takes about two minutes to work out.

The Two Numbers You Actually Need

Forget spreadsheets with forty tabs. Runway comes down to two things:

• Your essential expenses. Not your normal spending — your survival spending. Rent or mortgage, groceries, utilities, minimum debt payments, required insurance, transport to get to interviews. The stuff you genuinely can't switch off. Crucially, this is lower than your usual monthly spend, because the streaming services, the dining out, the “treat yourself” budget — those all get paused in a disruption.
• Your cash buffer. The money you can actually reach without creating a new crisis — savings, an emergency fund, accessible cash. Not your retirement account you'd pay penalties to crack open, and not your credit limit (that's not money, that's future problems).

Divide the buffer by the monthly shortfall, and there's your runway. If your essentials are $3,000 a month and you've got $18,000 you can reach, that's roughly six months of runway. Six months of breathing room. Suddenly the fog lifts a little.

Two Kinds of Disruption — and Why the Difference Matters

Here's where a bit of accountant's nuance helps, because “losing income” isn't always the same thing:

1. Your income stops (a job transition). This is the classic layoff or a leap into something new. Income goes to zero — or near it, if you've got severance or unemployment benefits coming in. The key question here is: does my runway last longer than the time it'll realistically take to land the next role? If job searches in your field are running six months and your runway is four, you've spotted a gap now, while you still have time to do something about it.

2. Your income drops (but doesn't stop). Maybe you take a lower-paid role to bridge the gap, go part-time, or move to contract work. You're still earning — just less. Your runway stretches a lot further here, because your buffer only has to cover the shortfall between your reduced income and your essentials, not the whole lot. This is exactly why taking an “imperfect” interim job can be a brilliant financial move: even a modest income dramatically extends how long you can hold out for the right thing.

Work Out Your Runway in Two Minutes

Rather than do this on the back of an envelope (though I do love a good envelope), I built a tool that does it cleanly. Our Runway Calculator asks for your essential expenses and your cash buffer, then lets you pick your scenario — income drops, or income stops for a set number of months — and tells you exactly how many months you can cover. For a job transition, it even tells you whether your buffer outlasts the expected gap, or how much more you'd need to bridge it.

No sign-up, nothing stored, nothing sent anywhere. Just your numbers and a clear answer — which is precisely what you need when your head's spinning.

Once You Know Your Number, Here's What to Do With It

The runway figure isn't the end — it's the start of a plan. Here's how I'd use it:

• Buy yourself more runway, fast. Every non-essential you pause and every bill you trim lowers your monthly shortfall, which stretches the runway. Cutting $300 a month off essentials on a $15,000 buffer adds real weeks.
• Sort out the income side. If you've been laid off, file for any unemployment benefits promptly — don't leave money on the table — and check your severance and how long your health cover lasts. Enter any of that income into the calculator; it extends your runway.
• Compare your runway to your job-search timeline. If the runway's shorter than a realistic search, that's your signal to widen the net: interim work, contract gigs, or a bridge role that stops the bleed while you hunt for the right thing.
• Protect the buffer. Resist cracking open retirement accounts or piling onto credit cards until you truly must. Those are expensive ways to buy time.
• Re-run it as things change. Get some severance? Land a bit of freelance? Update the numbers. Watching your runway grow is genuinely good for the soul.

Look — being laid off or between jobs is stressful, and no calculator makes that disappear. But there's a peculiar calm that comes from knowing your actual number. “We have five months” is a foundation you can build a plan on. “I don't know” just feeds the 3am worry. Trade the not-knowing for a number. You'll sleep better, and you'll make smarter moves.

Cheers, and hang in there,
Bob the Retired Accountant
Turning “I don't know” into “we've got this many months” since 1985