Liquidity
Emergency Runway
Fixed burn is survival. Variable burn is lifestyle. Dependants and income risk stretch the target.
An emergency fund is not a personality trait. It is months of survival burn, sized for your fixed costs, your dependants and how jumpy your income is.
Fixed burn
Rent, debt minimums, utilities, food you cannot cut. This is the survival line.
Variable burn
Travel, dining, discretionary. You can cut it. The full-lifestyle runway assumes you don’t.
Risk stretch
Self-employed or commission income needs a larger multiple. Dependants add a further buffer.
Takeaway
Cash above target is an inflation tax. Cash below target is a forced-seller risk. Hit the number, then invest the rest.
Run the numbers