Topic

Liquidity: What You Could Actually Reach in a Disruption

What you own and what you could spend next month are different quantities. Between them sit the time it takes to reach an asset, the price you would actually get, the penalty or tax for getting out early, and whether you would be willing to sell at all.

The arithmetic here is exact and it is also narrow. It says how long a buffer covers a shortfall you describe — never how much anybody should hold, how likely any disruption is, or how long one would last.

Start here

Three finished pages cover this subject, and they answer different questions. Start with whichever one matches yours. None of them assumes you have read the others.

  • Calculate

    Emergency Fund Runway Calculator

    Run the model on the cash you could actually reach, the share of any other asset you would genuinely use, a one-time cost and the income you expect to continue. It runs entirely in your browser: UBWHY does not receive what you enter, stores none of it, and puts none of it in a link.

    Open the calculator

  • Understand

    Why Liquidity Is Not the Same as Net Worth

    Why an asset can add to your net worth and still be no help in an emergency, what access time and sale friction actually cost, why a usable share is your assumption rather than a valuation, and why holding more cash has a price of its own.

    Read the explainer

  • Compare

    Runway across income coverage

    Five buffer multiples against seven income-coverage ratios in one reference table: the runway each produces, the factor coverage applies to any buffer, and the point at which the reserve stops depleting.

    See the reference

Three different questions

Calculate
How long would my own buffer cover the shortfall in a disruption I describe?
Understand
Why can an asset add to my net worth and still be no help in an emergency?
Compare
How much longer does a buffer last as income covers more of the outgoings, and where does the depletion stop?

The three overlap as little as they can. The calculator computes, in currency, from figures you supply; the explainer teaches the mechanism and needs no figures at all; the comparison holds a fixed set of ratios so buffer sizes and income levels can be read against each other.

One buffer, four income levels

What a buffer of 3× monthly essential outgoings covers, as the income continuing through the disruption meets more of those outgoings. The buffer does not change between these rows; only the income does.

0% of outgoings covered by income
3.0 months
50% of outgoings covered by income
6.0 months
90% of outgoings covered by income
30.0 months
100% of outgoings covered by income
Not applicable — the buffer is not being depleted

Outputs of a UBWHY calculation model applied to the assumptions above. They are not data about anybody, an expected duration, a probability or a forecast, and the buffer multiple is illustrative rather than recommended — UBWHY publishes no target number of months anywhere. The full reference set — five buffer multiples against seven income-coverage ratios, with every assumption stated and the boundary where the reserve stops depleting — is on Runway across income coverage.

A longer runway is not automatically a better position

Everything above prices one relationship: how long a pool of money covers a monthly gap. Two people with the same runway can differ in:

  • how long a real disruption would last, which nothing in this subject predicts
  • whether the income assumed to continue actually would
  • what an asset would really fetch, how quickly, and at what penalty or tax cost
  • credit, insurance, benefits, severance and support from anyone else, none of which is counted
  • what the essential outgoings could be cut to if they had to be
  • interest, investment return and inflation, all excluded from the model by decision
  • what holding the buffer costs by not being used for anything else
  • whether a buffer of any size is appropriate for any particular person

Money held as a buffer is money not used for anything else, and nothing in this subject calculates what that costs. UBWHY publishes no recommended buffer size and no threshold at which one becomes sufficient. Nothing on this page or the pages it links is a reason to hold more cash, hold less, sell anything or buy anything.

Nothing here is financial, legal or tax advice, and no product, provider, account or platform is named, ranked or recommended anywhere in this topic.

What this guide covers

The three UBWHY pages above are what has been finished on liquidity. A new one is listed here when it is published, never before it exists and never as a placeholder for something that might.