MONEY · SAFETY CUSHION
How many months in your cushion? "Three" is a lazy answer
The three-month rule circulates everywhere without ever saying three months of what. The right calculation depends on your real spending, the debts you must service and how stable your income is.
By the Yoseri News desk · · 5 min read
"You need three months put aside." You have read that sentence a hundred times. It says neither three months of what, nor three months for whom. Let us start again from the calculation.
Three months of spending, not of salary
The commonest confusion is to multiply your salary by three. It is wrong, and it is discouraging: your cushion is not there to replace your income, it is there to pay what goes out while the income stops.
On a budget where $3,160 goes out each month, a three-month cushion aims at $9,480 — not three times a $4,350 salary, which would give $13,050. The gap between the two ways of counting is $3,570 — that is, months of saving for nothing.
What your cushion must cover, no argument
Variable spending compresses. The rest does not. Debt instalments do not pause because your income stops: on the profile above, that is $1,342 a month that keeps going out, whatever happens.
- Housing, insurance, utilities: incompressible in the short term.
- Loan instalments: incompressible full stop.
- Groceries and transport: compressible, but not to zero.
- Subscriptions, restaurants, outings: the only real slack.
The real figure: your runway
The right question is not "how many months have I put aside" but "how long do I hold out". That is not the same thing: your cushion is not your only resource, and your debts are not your only outflow.
On a $6,320 cushion plus $3,600 of liquid investments, debts serviced, the real runway is 3.1 months — (6,320 + 3,600) ÷ 3,160. Cutting 20% of non-debt spending — $364 a month — takes it to 3.5 months. Almost half a month more, without one extra dollar.
Three months, six months, or something else
The length depends above all on how stable your income is. A single regular salary is replaced quickly; irregular self-employed income is not. If what comes in varies from $380 to $1,840 from one month to the next, aiming at six months is not excess caution: it is the minimum for not selling an investment at the wrong moment.
Conversely, piling twelve months of spending into an account at 0.05% while you pay 19.99% on a card is not cautious either. It is expensive.
And for you, what does that mean?
Three figures are enough: your real spending for one month, your debt instalments, and what is reachable within 48 hours. Divide the third by the first, and you have your runway.
In Yoseri, this calculation lives on the Savings page, with the "what if my income stopped" simulation — month by month, showing what holds and what breaks. None of these projections is a forecast: they are there to tell you whether you would hold out, not whether it will happen.
Yoseri News is an educational publication. Nothing in this article is investment advice, a recommendation to buy or sell, or tax advice. Yoseri is registered as neither an adviser nor a dealer with any market authority.