Money / Financial Planning
alfexe / Getty Images/iStockphoto
Digital payment platforms like Venmo, PayPal and CashApp have changed the way we use and keep physical cash on hand. Most people rarely keep cash on their person, much less at home. However, there are always unexpected events that can lead to a necessity for having a bit of cash on hand, particularly emergencies ranging from catastrophic weather (hurricanes, wildfire), to power outages. If you can’t access your digital currency or your banking systems are down, having cash can allow you to get gas, food, and medicines with ease.
Bonus Offer: Open a new Citi Priority Account by 1/9/23 and earn up to a $2,000 cash bonus after completing required activities.
See: 9 Bills You Should Never Put on Autopay
Find Out: 7 Things You Should Never Do When Planning For Retirement
However, just how much cash should you have on hand? We asked experts to weigh in and the answer is: It depends.
Keep Cash to a Minimum
From a security point of view, cash is the most insecure asset you can have. Keeping it to a minimum in the house in the case of fire or theft is a good rule of thumb, said Ryan McCarty, CFP from McCarty Money Matters.
Just how minimum is up for debate among financial experts. Danielle Miura, CFP, the founder and owner of Spark Financials, suggested, “You should keep enough money on hand to get you a couple of gallons of gas, pay for a delivery tip, or to help in unfortunate events,” or around $100-$200 at a time. “Emergency funds should not be held at your home, they should be stored in a high-yield savings account of your choice.”
McCarty framed it more in terms of a ratio: “In terms of amount, don’t let your cash exceed 10% of your overall emergency fund and/or $10,000. You can’t deposit more than $10,000 in cash in a given year without raising red flags with the IRS.”
Life Insurance Offer: Instant coverage upon approval. Get a quote in seconds and apply online in minutes. No medical exam ever – ages 18-60.
Live Richer Podcast: First-Time Homebuying During Inflation: Is It Worth It?
Enough for Emergency Expenses
Yasmin Purnell, a personal finance expert and founder of The Wallet Moth, a finance website, suggested you keep enough cash on hand in case of an emergency that would require you to access “temporary accommodation, food and drink, gasoline, and medication.” Purnell added, “As a general rule of thumb, having access to $1,000 in cash at home would ensure you can at least pay …….