Sizing Your Exposure:
how many months you would actually last

The number underneath the buffer

The First $1,000 Does the Most Work: how much buffer you actually need sized your buffer for ordinary shocks. This chapter sizes the big one: what would actually happen if your income stopped. How much would you need each month, for how many months, against what you could draw on.

The point isn't to hold all of it in cash — for most households that's impossible and unnecessary. The point is to know the number, because it drives every real decision: how much insurance to carry (Insure Catastrophes, Not Inconveniences), whether to keep a credit line open and unused (The HELOC as a Buffer: open the line in calm weather), and the order you'd do things in if it happened (15.6).

Working it out honestly

Start with the monthly floor. That's your coreFLOW (coreFLOW vs. lifeFLOW: the 2 questions that sort obligations from choices) — the bills that protect your home, your credit and your cover — adjusted for a real crisis. Some of it shrinks: everything discretionary goes, and some subscriptions and services go immediately. Some of it grows: health cover after losing a job costs more, because the employer's contribution disappears at exactly the moment your income does (Job Loss: the first 90 days, in order on the COBRA problem). And some of it can be paused or reduced through hardship programs that exist for precisely this (15.7).

Then list what you could draw on, in the order you'd actually reach for it:

1. Your cash buffer
2. Unemployment benefit, which replaces part of your wages — typically 40–50% on average, varying a lot by state, and capped at 26 weeks in most states¹
3. Severance, if there is any
4. A credit line kept open for this (The HELOC as a Buffer: open the line in calm weather defines what counts as an emergency; this does)
5. Raiding retirement savings — almost always the wrong early move

The answer is a number of months. That's how long you could survive, spending at crisis levels, working through that list. Most households have never worked it out.

Doing so changes behavior calmly, in advance. It tells you how much disability cover to buy (Insure Catastrophes, Not Inconveniences's most under-bought protection). It justifies keeping that credit line open. And it turns "how bad would it be?" from something you lie awake with (Money Problems Eating Your Time? what that costs, and buying it back's 2 a.m. arithmetic) into a number with a plan attached.

The takeaway

Work out the worst case on purpose. Your crisis-level monthly floor, then everything you could draw on in the order you'd reach for it, and the answer is how many months you'd last. The number isn't there to be held in cash. It's there to be known — because it prices your insurance, justifies the structures you keep in reserve, and replaces 2 a.m. dread with the one thing dread can't survive: a number you've already worked out.