Understanding Runway and Why You Need it for Travelling

let's talk about runway and why it's an important thing for you to know if you're traveling and i get this from startups where they need to know how many months of capital they have before they run out of money and have to go get more funding or shut the door runway is your total monthly expenses and the amount of money that you have in the bank so you to work this out you take the total amount of money that you have saved and you divide it by your monthly expenses that will give you a figure of how many months of runway you have if you don't earn any more if you're earning while you're going this is the ideal situation ideal you earn more than you spend therefore every month your runway increases non-ideal but still fine is if you spend a little bit more each month then you earn this is ideal if you're traveling and you have some savings if you have 3 000 in savings and you are spending 600 but you're earning 500 you have 30 months runway okay how much runway should you actually have i personally think you should have four to six months runway in cash available when you need it this will protect you against things like losing your laptop losing your phone a medical expense that you didn't see coming that you have to pay for that's the ideal situation obviously i know it's not achievable for a lot of people to start with but the goal of remote working is to actually put yourself in that position the non-ideal situation but still a way of doing it is to have your runway stored on something like a credit card or in an overdraft facility so that you know if you have to you can burn through that credit card the problem with these the overdraft and the the overdraft and the uh the credit card is that once you've spent that money it's gone but you still owe that money it's not your money so you're stealing from your future self and because of interest you're going to end up paying back more than you actually spent not ideal but i understand that sometimes everyone has to do this i've done it let me just get over these rocks ah finally found the path again i got off the path for a long time another way of having runway is having that money invested in things like stocks and bonds or crypto i personally don't think this is a good idea because the value of those things can drop you don't really know how to time the market etc so you could end up either with zero runway or selling those stocks and bonds for less than you paid for them not ideal so to recap runway is the amount of months that you have at your current savings level if you didn't earn any more money you need to know your expenses per month and the amount of money that you have saved then divide the amount of money you have saved by the amount you spend each month the ideal situation here is you have it in cash but if you have to do it on a credit card and you have to do it in an overdraft fine see ya