Emergency runway is the number of months your liquid savings would last if income stopped. Divide liquid holdings by the monthly outflows you would still have to pay: an illustrative family with ₹6,00,000 in liquid holdings and ₹75,000 of monthly outflows has a runway of 8 months. Counting in months tells you more than the rupee figure, because it puts savings next to what the household actually spends.
This post shows the calculation, explains which outflows belong in it and why EMIs, premiums and SIPs count, and walks through a worked example.
What is the runway formula?
Runway in months = liquid holdings ÷ monthly outflows that must still be paid.
Both parts need care. The top of the fraction is not your net worth. The bottom is not your current spending in a good month. Each is a narrower number, and getting either one wrong makes the answer look better than it is.
What counts as a liquid holding?
A liquid holding is money you can reach within a few days, without a lock-in and without a large loss. For most Indian households that means:
- Money in the savings bank.
- Sweep or auto fixed deposits linked to the savings bank.
- Liquid fund and similar short-term debt fund holdings, which usually settle within a business day or two.
Some holdings sit in a grey area. A regular fixed deposit can usually be broken early, often with a penalty. Equity fund holdings can be redeemed in a few days, but the value moves with the market, and in a bad month you may have less than the statement said. Many families count these at a discount, or leave them out and treat them as a second layer.
Money in PPF, NPS, an endowment policy or a property is part of the family's wealth, but it is not runway. You cannot pay next month's EMI from it at short notice. Net worth on the Family tab is a different question, covered in family net worth for two people.
Which outflows must still be paid?
The bottom of the fraction is the monthly outflows that would continue if income stopped. This is where most runway sums go wrong, because people count living costs and forget the commitments.
Living costs
Groceries, utilities, school fees, transport, medicines and household help. Some of these can be cut in an emergency. Many cannot.
EMIs
An EMI does not pause when a salary does. The bank debits it on the same date whether or not the household has income, and a missed EMI costs a fee and marks the repayment record. A home-loan EMI is often the largest single monthly outflow, so leaving it out can make the runway look twice as long as it is. The long view of a loan is in tracking an EMI for its full tenure.
Insurance premiums
Health and term cover matter most in exactly the months when income is uncertain. A lapsed policy can be hard or costly to restart. Yearly premiums should be spread into a monthly figure: a ₹36,000 yearly premium counts as ₹3,000 a month. See the gap between term and health cover.
SIPs you would keep paying
Some families would pause SIPs in a crisis. Others would keep some of them running, for a child's education goal for example. Any SIP you would keep paying is an outflow for runway, just like an EMI. Any you would pause can be left out. The choice is yours, and it changes the answer, so write it down rather than leave it vague.
Rent
If you pay rent, it belongs here. If you receive rent and it would continue, it can reduce the outflow figure, since it is income that does not depend on a job.
What does a worked example look like?
Take Asha and Ravi Rao in Pune, with their daughter Meera. The numbers are illustrative and rounded to keep the arithmetic easy to follow.
Their liquid holdings:
| Holding | Amount |
|---|---|
| Savings bank, both of them | ₹1,50,000 |
| Liquid fund | ₹3,00,000 |
| Sweep deposit | ₹1,50,000 |
| Total liquid holdings | ₹6,00,000 |
Their monthly outflows that would continue:
| Outflow | Monthly amount |
|---|---|
| Home-loan EMI | ₹27,000 |
| Household living costs | ₹30,000 |
| Meera's school fees, spread monthly | ₹5,000 |
| Insurance premiums, ₹36,000 a year spread monthly | ₹3,000 |
| SIP for Meera's education goal, kept running | ₹10,000 |
| Total monthly outflows | ₹75,000 |
Runway = ₹6,00,000 ÷ ₹75,000 = 8 months.
What if they pause the SIP?
If the Raos decide the education SIP would pause in an emergency, the monthly outflow drops to ₹65,000. Runway becomes ₹6,00,000 ÷ ₹65,000 = about 9.2 months. Pausing ₹10,000 a month buys a little over one extra month.
What if they forget the EMI?
If they had counted only living costs, school fees and premiums, the outflow would be ₹38,000 and the runway would look like ₹6,00,000 ÷ ₹38,000 = about 15.8 months. That is nearly twice the real figure. The EMI alone is the difference between a family that thinks it has 16 months and one that has 8.
Why count months instead of rupees?
A rupee figure has no meaning on its own. ₹6 lakh is 12 months for a household that must pay ₹50,000 a month and 6 months for one that must pay ₹1,00,000. Months put the savings and the commitments in the same number.
Months also move when the savings bank does not move. A new EMI, a higher school fee, a new yearly premium or a new SIP all shorten the runway, even though the money in the bank is the same. Taking a new loan without looking at runway is the most common way a family's cushion quietly halves.
How often should runway be rechecked?
Recheck it whenever a monthly commitment changes: a new loan, a change in EMI after a rate reset, a new policy, a new SIP, a change of school. A quick look once a quarter catches the rest. The fixed dates of the year are in the household money calendar.
How Kosh helps
In Kosh you add each EMI, SIP, premium and rent once with its schedule, and Runway shows how many months your Household's savings last. What-if lets you try a change, such as a new EMI or a paused SIP, and see the new runway before you make it. Hard rules can warn you when a change would break a limit you have set. Kosh tracks and warns; you decide.
Kosh is in private testing on iPhone and free during testing. Visit ourkosh.com.