Having cash on hand for unexpected expenses is an essential part of any sound financial plan. But how much cash should you keep on hand? Is it better to keep your money in the bank or at home? And is it even legal to keep cash at home?
In this article, we’ll explore these questions and more, offering tips and insights on how much cash to keep on hand and where to keep it. Whether you’re working or retired, it’s important to have a saving formula that works for you, so you can be prepared for any unexpected financial needs that may arise. So, let’s dive in and learn more about how to safely and wisely store your cash.
How Much Cash to Have If You Are Working?
If you are still working, it’s important to have enough cash on hand to cover unexpected expenses, while also maintaining a healthy savings account for future goals. The general rule of thumb is to have three to six months’ worth of expenses saved in an emergency fund, but the exact amount will vary depending on your financial situation. As a starting point, aim to have at least $1,000 in readily accessible cash for emergencies, such as car repairs or medical bills. This money should be kept in a safe and secure place, such as a fireproof safe or a locked drawer. It’s also a good idea to have a separate account for your emergency fund, such as a savings account with a high yield interest rate. By having a saving formula that works for you, you can be prepared for unexpected expenses while also working towards your long-term financial goals.
Money in Your Checking Account
If you’re still working, having cash in your checking account is essential for covering your essential living expenses and discretionary purchases. While you can keep cash as physical bills at home, checking accounts offer a secure way to keep your money accessible and easily withdrawable in emergencies. However, keep in mind that checking accounts may have single-day withdrawal limits or limits on ATM withdrawals, and they don’t usually accrue interest like savings accounts do. It’s important to have a saving formula that works for you and takes into account your monthly expenses, any outstanding debts, and your income sources. The exact amount of cash to keep in your checking account will depend on your individual financial situation and lifestyle, but having enough to cover your living expenses for at least a few months is a good rule of thumb. Ultimately, the key is to find a balance between keeping your cash accessible and secure.
Money in Your Savings Account
Another one of the safest and most convenient places to keep cash is in a savings account at a bank or credit union. Savings accounts are designed to earn interest while keeping your money secure and easily accessible. How much money you should keep in your savings account depends on your individual financial situation, such as your income, expenses, debts, and savings goals. As a general rule of thumb, financial experts recommend having at least three to six months’ worth of living expenses saved in your savings account. This can provide a buffer in case of a job loss or other financial emergency. However, you may need to save more or less depending on your specific circumstances. It’s important to regularly evaluate and adjust your saving formula to ensure you’re meeting your financial goals and needs. While keeping cash at home can also be a good idea, it’s important to balance the convenience of having cash on hand with the risk of theft or loss. It’s generally not advisable to keep large amounts of cash at home, and you should always store your cash in a secure and hidden location. The key is to have a saving plan that works for you and provides peace of mind that you’re prepared for any financial situation.
How Much Cash to Have If You Are Retired?
When you’re retired, having cash on hand becomes even more critical, as unexpected expenses can be more challenging to handle on a fixed income. Financial experts recommend having at least six months’ worth of expenses safely set aside and readily accessible in case of emergencies. This means having enough money in cash or in a checking account to cover your living expenses, such as housing, food, and healthcare. However, the exact amount of cash to keep on hand will depend on your individual financial situation and lifestyle. It’s essential to consider your monthly expenses, any outstanding debts, and your retirement income sources when determining how much cash you should keep on hand. While it’s generally safest to keep cash in a bank or credit union account, it’s also a good idea to have some cash at home in case of emergencies, such as natural disasters or power outages. Just be sure to store your cash in a safe and secure location, such as a fireproof safe or lockbox.
How Much Cash Should You Keep in Your Home?
When it comes to saving cash at home, it’s important to balance convenience with safety. While it’s tempting to keep a lot of cash on hand for emergencies or personal use, keeping too much cash at home can put you at risk of theft or loss. Personal finance experts recommend keeping only a small amount of cash at home, such as $100 to $200, for small purchases or unexpected needs. If you’re carrying cash on vacation or in other situations, it’s generally advisable to carry only what you need and to keep it secure in a money belt or other hidden location. For long-term storage of cash at home, it’s best to use a fireproof safe or lockbox that’s bolted to the floor or wall. This can help protect your cash from theft, fire, or other disasters. However, it’s important to weigh the risks and benefits of keeping cash at home versus in a bank account. While keeping cash in a bank account can earn interest and provide easy access to your money, it can also be vulnerable to hacking or other security breaches. The amount of cash you should keep at home depends on your individual needs and circumstances. It’s important to consider your budget, your saving goals, and your overall financial plan when determining how much cash to keep on hand.
The Bottom Line When it comes to determining how much cash to keep on hand, there are a number of factors to consider. For individuals who are still working, it’s generally recommended to have at least three to six months’ worth of living expenses saved in a savings account. This can provide a buffer in case of a financial emergency, such as a job loss or unexpected expenses. While it’s important to have some cash on hand for small purchases or emergencies, it’s generally not advisable to keep large amounts of cash at home. Instead, it’s best to store cash in a safe or secure location, such as a fireproof safe or lockbox. When it comes to carrying cash, it’s important to balance the convenience of having cash on hand with the risk of theft or loss. Experts generally recommend carrying only what you need and using a secure method of storage, such as a money belt or hidden location. The amount of cash you should have on hand depends on your individual needs and circumstances. It’s important to regularly evaluate and adjust your saving formula to ensure you’re meeting your financial goal