How Much Cash Is Appropriate To Carry?

Even 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?