How Much Cash Should I Have on Hand?

By Janet Siroto · May 20, 2024 · 6 minute read

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How Much Cash Should I Have on Hand?

Are you wondering, “How much cash should I have on hand?” There are two ways to look at this question. One meaning is how much actual currency (say, $20 bills) you should keep in your wallet or at home. Another way to look at that question is how much liquid money should you have available in case of emergency, such as cash in a savings account vs. equity in your home, which can be a challenge to tap into quickly.

This guide will cover both of those scenarios and help you understand the importance of having some cash accessible when it’s needed, whether in case of an emergency or everyday spending. Read on to learn the specifics.

Key Points

•   Determining the right amount of cash to keep on hand involves considering both physical currency and liquid assets for emergencies.

•   Working individuals should aim to save three to six months’ worth of expenses in an accessible emergency fund.

•   For retirees, it’s advisable to have three to six months of living expenses readily available, with some experts recommending up to 24 months.

•   Keeping a small amount of cash at home, such as $100-$200, can be practical for immediate needs during emergencies.

•   The amount of cash to carry daily might vary, but having around $100 can be useful for minor cash-only transactions or emergencies.

How Much Cash Should You Have If You’re Still Working?

First, consider how much cash the typical person who’s working should have available. You may be at a stage of life when you are putting away money towards certain financial goals, such as retirement or your child’s college education. That’s money you don’t want to touch.

Which is why you also likely need to have money in an emergency fund. This is money you can quickly access if you have an unexpected medical or car repair bill or if you were to lose your job. This money can tide you over and help you avoid resorting to using your credit cards to pay for things. Credit card debt is high-interest debt, with interest rates currently over the 20% mark on average.

Financial experts usually advise that people add up their monthly expenses: housing, food, healthcare, utilities, discretionary spending, etc. Then, you want to sock away three to six months’ worth of those monthly expenditures. That money doesn’t have to be accumulated all at once. You might automate your savings and have a small amount transferred from checking into an emergency savings account every time you get paid.

Recommended: Find out how much you should save for unexpected expenses with our emergency fund calculator.

What’s nice about an emergency fund is that the money is immediately accessible when you need it. Unlike, say, the equity in your home, your invested funds (the value of which can rise and fall), and a valuable family heirloom, the cash is ready and available. A good place to keep it might be in a high-yield savings account, where it will be insured up to the FDIC or NCUA limits.

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How Much Cash Should You Have If You’re Retired?

If you are retired, the same basic thinking holds true about how much cash to have available. Whether you are on fixed income or still bringing in some kind of paycheck, you will want to have at least three to six months’ worth of living expenses available.

Some experts suggest that those who are retired should keep more than that amount in cash available. They believe that 12 to 24 months is a wiser number. That way, if you are hit with a major medical bill that you can’t negotiate down, you will be able to tap your cash vs. sell off investments. That’s an example of why an emergency fund is a priority.

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How Much Cash Should I Keep at Home?

Now that you understand how much cash to have available in a liquid form, consider how much literal cash (as in the bills you get when using an ATM) to keep on hand.

Of course, you don’t want too much cash sitting in a drawer when it could be safely in a bank or credit union, earning interest. But it can be wise to keep at least $100 or $200 on hand.

For instance, you might imagine what would happen if a mammoth storm came through and knocked out power to a portion of your town and many businesses were closed. You might need to fill your gas tank to drive to the next town over to get food, or you might have to pay for some emergency supplies or to refill a medication prescription.

While some people may want to keep more than that amount “just in case,” the prevailing wisdom is to have no more than $1,000. If you keep that much cash in your house, you may want a home safe. Otherwise, theft, fire, and simply forgetting where you stashed it could be issues.

How Much Cash Should I Keep in My Wallet?

How much money you need to keep in cash in your wallet will vary. Many people today use their debit card and payment apps for daily spending and carry very little or even no cash. But having some money, perhaps $100 or so, can be a wise move.

You might wind up needing to buy something at a local, cash-only business. Or you might be purchasing something from a store that adds a surcharge for those who use cards or mobile payment apps, to recoup the fees they are charged. Having a bit of money in your wallet could help you out in this and other situations.

Where Should I Store My Cash?

You might consider keeping day-to-day money in a checking account, and emergency money in a separate savings account. That way, you don’t need to battle the constant temptation to spend it. Keeping cash in an account insured by the Federal Deposit Insurance Corporation (FDIC) and that earns a solid interest rate are wise moves as well. Online banks typically offer these features.

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How much cash should the average person keep at home?

According to one recent survey, the largest segment of Americans keep less than $100 at home, with between $101 and $500 being the next most common amount. About one in six don’t keep any money at all. That said, it can be helpful to have some cash on hand in case of emergency.

How much cash does the average person carry?

The average American carries $67 in cash, but that figure can vary widely.

Why do people keep large amounts of cash at home?

Some people may feel their money is safest at home, close at hand. Others may be unbanked and not have a bank account in which to stash their cash. Still others may want the reassurance of knowing they have some dollars available if, say, there were an emergency situation.

Is it wise to keep cash at home?

It can be wise to keep some cash at home. Perhaps you want to run to the farmers market and make a purchase in cash without stopping at an ATM. Or maybe there’s an emergency situation, and your local ATM is out of cash. Having cash on hand can be very helpful.

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