Picture this: You're earning $75,000 a year and suddenly face a layoff. Your emergency fund sits at $15,000, but your monthly expenses total $4,200—including that $1,766 mortgage payment on your $350,000 home. How long can you survive? That's where understanding your burn rate becomes critical. Your burn rate measures how fast you're depleting cash each month, while your runway tells you how many months you have before hitting zero. Whether you're between jobs, launching a startup, or planning early retirement, this burn rate calculator gives you the hard numbers you need. No guessing, no panic—just a clear timeline of your financial runway.
How to Use
Start by entering your total monthly expenses—include rent, utilities, groceries, debt payments, and even your 401k contributions. Next, input your current cash savings and liquid assets (not investments you'd pay penalties to access). The calculator instantly displays your monthly burn rate and exactly how many months your money will last. Adjust the numbers to see how cutting costs extends your runway.
Pro Tips
Build at least a 6-month runway. Financial experts recommend saving enough to cover 3-6 months of expenses, but in today's uncertain job market, aim for the higher end. Cut big expenses first. Your $350,000 home with a 30-year mortgage at 6.5% APR costs $1,766 monthly in principal and interest alone. Refinancing or downsizing saves more than skipping lattes ever will. Never raid your 401k as a first resort. Early withdrawals trigger IRS penalties plus income taxes, and you permanently lose your employer's 6% match. Track every dollar for 30 days—most Americans underestimate their spending by 20-30%.
Common Mistakes to Avoid
Forgetting irregular expenses trips up most people. Annual costs like car registration, holiday gifts, and property taxes don't appear monthly—but they still drain your account. Budget at least $300 extra monthly for these surprises. Ignoring healthcare costs is another costly error. If you leave your job, COBRA coverage can run $600-800 monthly for an individual plan—far more than your employer-sponsored premium. Finally, many people underestimate their true burn. A $75,000 salary looks like $6,250 monthly, but after federal taxes, FICA, and retirement contributions, your actual take-home is closer to $4,200. Calculate your burn rate on what you actually spend, not what you earn.
Frequently Asked Questions
What's a healthy burn rate for someone making $75,000 per year?
Aim to keep your monthly burn rate under $3,500 (about 56% of gross income). This leaves room for savings, your 6% 401k contribution, and unexpected costs. If you're spending over $4,500 monthly at that income level, you're likely living paycheck to paycheck with minimal runway.
Should I include my mortgage payment in my burn rate calculation?
Yes, include your full housing payment. On a $350,000 home with 20% down and a 30-year mortgage at 6.5% APR, you're paying roughly $1,766 monthly in principal and interest. Add property taxes and insurance, and housing alone may consume 35-40% of your total burn rate.
How do I calculate runway if I have irregular income?
Use your average monthly expenses over the past 3-6 months for an accurate burn rate. If you have $24,000 in liquid savings and spend $4,000 monthly, your runway is 6 months. Freelancers and commission-based earners should add a 20% buffer to their burn rate for income volatility.