How Much Cash Is Appropriate To Carry?

GeorgeEven though I cover almost all of my expenses using plastic, I do tend to keep a small amount of cash in my wallet to cover emergency situations, tips, and such things. This seems to be a regular thing for many people – most people seem to have a bit of cash tucked away for just such purposes.

Here’s what I keep tucked away and why:

Four $20 bills This is enough to cover almost every cash-based emergency that I can think of, such as paying a tow truck.

Four $5 bills and five $1 bills I keep these for tipping purposes, for dining and drink service, for example. If I know I’m going to be traveling, I up this amount quite a bit.

Other than this, I essentially don’t carry cash any more – my regular purchases all happen on a pair of rewards credit cards (between the two, I get between 3% and 6% cash back).

The question really comes down to risk: is this more cash than I should be carrying at any given moment? Given the benefits of having the cash when I need it, it’s a risk that I’m willing to take – the odds of a robbery in the area where I live are so low that it’s almost a non-factor.

In fact, the biggest risk of having this cash on hand is a temptation to use it. I sometimes think of it when I see a frivolous purchase and I attempt to justify using that cash for things I don’t really need.

To solve that, I generally tuck this cash into a pair of tiny pockets in my wallet so that they’re hidden from regular view. Then, when I actually need the cash, I am reminded of it, but during most normal activities, it never comes into my mind.

What’s your “cash on hand” policy?

Trent Hamm
Trent Hamm
Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

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