Runway
How long you could keep going if the income stopped today.
Borrowed from business, where it means how many months a company can operate before the money runs out. Applied to a household it asks the same question: if income stopped today, how long until you were in trouble?
The answer is measured in months, not currency, and that is the point of the word. Two people with identical savings can have very different runways, because one spends twice as much as the other. Reducing what you spend lengthens your runway from both ends at once — you need less per month, and what you have covers more of them.
It reframes an emergency fund usefully. “Three months of expenses” is an accounting target. “Three months before this becomes a crisis” is the thing you actually care about, and it is the version that makes the trade-offs obvious.
It is also the honest measure of financial security. Not net worth, which can be entirely locked in a house, but how much time you have if things stop. Time is what lets you refuse bad work, absorb a shock, and make decisions rather than take whatever is offered.
Words on this page
- Emergency fund — Cash set aside to cover unexpected, necessary and urgent costs, so they do not become debt.
- Net worth — Everything you own minus everything you owe — one number for your whole financial position.
Related terms
Covered properly in Learn.
This term appears in the glossary of The Quiet Fortune, Volume II.