You will use it within 5 - 7 months. Keep in mind, that just even for renting, you will have to give a first, deposit, (and sometimes last month). Assuming you are going to have roommates, if your rent is 1k (can be more, can be a bit less in crappy area), + moving costs, you could see easy 4k gone, just when you land there.
The chances to get funding, or any revenue within that time are pretty much 0, unless you have a solid prototype already build, do you?
My advice, is move to SF, find a job (hopefully one that will pay relocating costs), or maybe even a contracting one, and then develop your product on the side. When it is at least 60% done, and you have a bit more savings, go full swing into it.
The rule of thumb, you should have at least 1.5 years of savings. If you have parents that lend 20k extra when things go sour, then 9-1yr would be good enough.
In SF that would be at least 30k. add about 10k you will need for the business (servers and such, depends on what you are doing, then 40k is minimum.
If you are working as an engineer, and are smart with money, you should be able to save at least 20k-30k a year.
overall, sound advice, I think.
Note: if you move to silicon valley rather than SF, you can get a room in the lower-end but perfectly safe areas of Santa Clara or Sunnyvale for $600/month or so. $800-$1000 will get you a nice room that's near to the y combinator offices. If you are renting a room, you often can get away with first and deposit, especially for lower end stuff. Look around.
As for savings, well, that depends on your risk tolerance. A year and a half seems pretty excessive to me, but then I personally co-sign business loans and leases, so if the company craters, any personal money I had is gone anyhow.
If you are in a capital intensive space (e.g. you have to buy lots of servers like I do) contracting while you are starting up (if you can talk people into going corp to corp) can have some tax advantages, too.
Conservatively, I'd say you need about 6 to 9 months living expenses in the bank and if that ever goes below 2 months remaining it might be time to see if you can land a job somewhere again.
The safe way to do this is to try out your consulting next to your regular employment.
That might take longer but the chances of failure are dramatically less.
I had a product idea that I wanted to work on. So, I started doing consultancy to make some cash and bootstrap my way. Then I found a biz co-founder, hired a designer and two programmers to take care of the consultancy business. Our team size quickly grew to 20 programmers and designers, and we had several paying clients.
Most programmers we hired were average, but not great. This team could make websites, but not products. We hired this team to do work clients projects, so I can focus on building our product.
Since our team and clients were in different time zones, I had to deal with clients in night and development team during day. This setup kept me engaged and busy with client's projects. Therefore, we were unable to work on our product and we missed the boat.
Recently, I decided to quit the company and move on to work on my new product startup.
Spend a year working, networking and getting the lay of the land, and then jump off and do your own thing. There's tons of companies that are hiring right now.
Aside from that, $18k really isn't much at all in SF or SV. Spend part of the $18k in coming out here for a visit for a month or so, do some networking land a job and then move out. Think of doing startups as a more long term plan rather than a short term leap to SF to see how far you can get by living on ramen noodles.
If you are all-in on your new project though, you should be able to make it though. Just make sure you already have that new computer or whatever tools you'll need to get started. I've found a nice computer always boosted my productivity and made me feel better :)
This way you can dedicate the 18k to marketing once the product is completed. Contrary to the dream stories of everything going just right, not many products go grass roots or viral or whatever we are calling it these days. Many of them require good old fashion marketing to get the word out.
18k still does not give you a whole lot of runway especially if you have rent, electricity, food and the other life necessities. Postpone spending cash as long as possible and when you do make sure that that cash is going into something that will convert back into revenue.
If you don't understand marketing, start learning about it now. Buy some books read some blogs of industry leaders. You will have to become an effective marketer if you want your product to succeed. Contrary to popular belief even some great products don't sell themselves and require good marketing.
When both my co-founder (formerly in Investment Banking) and me (previously in Public Relations) left our jobs, we split our savings of $70k where the majority went to rent, food and other necessities living in a big city like New York. We also began to set up the necessities of the business, i.e. legal entity, website development, etc. and then went into product mode. We managed to start the company and live off our savings for thirteen months before we took outside funding.
The biggest thing to think through regarding savings, like cpercviva mentioned, is figuring out where the largest amount of your money needs to go. For us, and any other person thinking about taking the leap in New York, is usually rent.
I'd map every single expense you've had in the last year in a Google Spreadsheet so you can trim any "financial fat".
I think $18k is plenty fine, (but that's just me). I'm planning to do a similar thing and my savings are less than that.
Not for San Francisco.
If you've got eighteen grand, well, you are going to have to start making money quick. Living around here is pretty expensive. Be prepared to get a contract gig, because for most product businesses, ramping up as fast as you will have to ramp up with that runway will be quite difficult.
To get a baseline of what you need, calculate your living expensed plus do the worst-case calculations for a year.
Expect that your currently fully-working laptop and mobile phone are both going to break and you have to buy new ones. (sudden hw costs can be easily a couple of grands). Ditto for cars etc.
If you have a spouse, don't expect that working from home for a year is such a great idea, thus plan some money for renting a space.
If you are planning on self funding wouldn't it be much better to bootstrap in a lower-cost location?