Cash pool

Cash pool answers one question: if every other source of money stopped today, how many months could your cash balance alone keep you afloat? It's the first line of defense, sized to be enough - and not more than enough.

What it measures

Your cash balance divided by your net monthly outflow (spending minus income, when spending exceeds income). The result is expressed in months - how long your cash alone would cover the gap if income disappeared.

The scale

This is a "goldilocks" gauge on a 0-24 month axis: there's a target band, not just a floor. The green zone is 4 to 9 months.

• Below 4 months — shortfall risk. A red zone near zero, amber as it approaches 4.
• 4 to 9 months — right-sized. The green band.
• 9 to roughly 24 months — above target, then excess, as amber gives way to red at the far end.

Why this range

Too little cash means an income gap or unexpected bill forces you to sell investments or borrow at exactly the wrong moment - often when markets are already down, which locks in a loss you didn't need to take. Too much cash has a quieter cost: money sitting uninvested loses ground to inflation and misses the returns it could otherwise be earning. 4-9 months matches the commonly cited emergency-fund range in personal finance guidance, wide enough to absorb a job search or a medical bill without either overexposing you to a shock or parking years of spare capital that should be working for you.

Cash pool is deliberately narrower and stricter than liquidity pool, which adds fixed income and is sized for a slower-moving risk (a market downturn) rather than a sudden one.