An explicit household cash-flow exercise
A Korean household provides monthly take-home income of six million won, essential living costs of three million won, debt principal and interest payments of one million won, and planned saving of one million won. The household also holds twelve million won in immediately accessible savings. These figures are supplied assumptions for a planning exercise, not statutory benchmarks. The clients want to understand the unallocated monthly surplus and how long the accessible savings would cover essential living costs plus the stated debt payments if income stopped. Their home is valuable but is not being sold or borrowed against in this scenario. No investment return, tax change or new benefit is assumed. The planner must distinguish the cash-flow result from a recommendation about any product.
1. Calculate the unallocated surplus and reserve coverage.
Read the worked answer
Surplus is 6 − 3 − 1 − 1 = 1 million won per month. Essential costs plus debt are 4 million won monthly, so accessible savings cover 12 / 4 = 3 months under the assumptions.
2. What should be assessed before recommending a change?
Read the worked answer
Discuss income stability, near-term obligations, access constraints and the clients’ priorities. The ratio is a diagnostic illustration, not proof that three months is sufficient for this household.