Guide · US edition · Updated 2026-10-29

Layoff Budget: How To Calculate Your Financial Runway

Your runway is how many months you can cover essential costs before you need new income. Knowing the number turns panic into a plan.

Step 1: Money you have

Cash in checking and savings
Severance (after taxes)
Final paycheck and vacation payout
Expected unemployment benefits (check your state's estimate)
A partner's income

Step 2: Must-pay costs per month

Rent or mortgage
Utilities, phone, internet
Groceries
Health insurance (COBRA vs. Marketplace)
Minimum debt payments
Car payment, insurance, gas
Childcare, medications

Step 3: Pause or cut

☐ Subscriptions and memberships
☐ Dining out and delivery
☐ Extra debt payments above the minimum (keep paying minimums)
☐ Big purchases and travel
☐ Ask about hardship programs for loans, credit cards and utilities
☐ Federal student loans: ask your servicer about deferment or an income-driven repayment change

Step 4: Calculate

Runway (months) = Money you have ÷ Monthly must-pay costs

Example: $14,000 ÷ $3,500 = 4 months.

Step 5: Protect it

Try not to cash out your 401(k) first (401(k) options)
Avoid new high-interest debt where you can
Keep an eye on taxes: severance and unemployment are generally taxable

Revisit weekly

Update the numbers every week. If the runway gets short, consider part-time, contract or gig work, and ask for help early.

General information, not financial advice. A nonprofit credit counselor (NFCC member) can help for free or at low cost.

The Laid-Off Action Kit's spreadsheet has a budget with an automatic runway calculator.

Laid-Off Action Kit — $12

18-page workbook: first 48 hours, questions for HR, severance review, unemployment, COBRA vs. Marketplace, runway budget and a job application tracker. Instant download: PDF + DOCX + XLSX.

Get the Laid-Off Action Kit Family Paperwork Bundle — $34