Liquidity architecture for lumpy family cash needs
Households with uneven income rarely run short of money over a full year. They run short on particular dates. A K-1 shows income in September with no distribution behind it. A property tax bill and a January estimated payment land in the same month. A sale closes in November and the tax on it is due in April, but the proceeds have already been committed. The fix is not a bigger cash balance. It is a calendar that shows when tax money is needed, and an account that holds it until then. This post covers how to build a tax cash calendar for a household with several income streams, how to size a tax reserve, and what records keep it honest. It is not investment advice and it does not recommend where to hold cash. It is about matching tax obligations to the dates they are actually due. Why a flat cash rule fails A rule like "keep six months of expenses in cash" assumes spending is even across the year. Tax is not. For a household with lumpy income, most of the year's tax ...