The day the paycheck stops

Prepare

This area is about how much financial shock a household can absorb before it has to borrow.

Unexpected costs are not unusual events. A car, a geyser, a medical bill or a gap between jobs arrive for most households eventually. Whether they become a debt problem depends largely on what was already set aside.

Worth separating

Accessible and invested

Money reachable within days behaves differently from money that must be sold, or that carries a penalty for early access.

Essential and total spending

Resilience is usually measured against what a household must spend, which is generally lower than what it does spend.

Income stability

Salaried, commission-based and self-employed income carry different volatility, which changes how much buffer is being asked to do.

Questions people commonly want answered

• What does the household actually spend in a month on essentials alone?
• How much could be reached within a week without a penalty?
• How many months does that represent?
• What would currently be used if something unexpected arrived tomorrow?