This is the simplest goal in Kerdora, and it might be the most important conversation you have with a client.
Can they cover an emergency? If their income stopped tomorrow, how many months could they sustain their lifestyle with accessible cash?
How I think about it
Most advisors default to "you need 3-6 months of expenses in an emergency fund." That's fine as a starting point, but it depends on the client. A dual-income household with stable W-2 jobs is different from a single-income freelancer. Someone with a large taxable brokerage has more flexibility than someone whose net worth is entirely in retirement accounts they can't touch.
The point of the liquidity goal isn't to tell every client to save 6 months. It's to quantify the gap so you can have an honest conversation about whether they're comfortable with it.
The inputs
Two numbers:
Months of expenses — how many months of runway they should have
Monthly expenses — pulls from their cash flow profile, or you can set it manually
That's it. Target = months x expenses. No inflation, no investment returns, no compounding. Just a straightforward "do you have enough cash accessible?"
Why it matters
Liquidity is the foundation everything else sits on. If a client doesn't have enough accessible cash, it doesn't matter how good their retirement plan is. One car repair or medical bill and they're pulling from investments at the worst time, or going into debt.
I always work through liquidity first. If there's a gap, it's the first change to note.