{"id":13228,"date":"2024-06-20T17:12:59","date_gmt":"2024-06-20T17:12:59","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13228"},"modified":"2024-06-20T17:13:00","modified_gmt":"2024-06-20T17:13:00","slug":"how-much-actual-cash-should-i-keep-at-home","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/how-much-actual-cash-should-i-keep-at-home\/","title":{"rendered":"How Much Actual Cash Should I Keep At Home?"},"content":{"rendered":"\n

Lucille M. from Birmingham, AL asks:<\/em> Hello Mitch, I know about the importance of keeping about a year\u2019s worth of income needs in cash. But what\u2019s your take on having some of that cash at home, in a safe, or some other secure place? Are there guidelines on how much physical cash to keep close by? Thank you.<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thank you for sending your question, Lucille. You ask an interesting question and one that\u2019s especially a consideration for older generations.<\/p>\n\n\n\n

My position on your question is that people really shouldn\u2019t keep much cash in the home. There are a few reasons for my perspective here. The first is that keeping high levels of cash at home raises the risk of losing it, forgetting about it, or even having it destroyed by an unexpected incident like a natural disaster or a fire. This risk can be mitigated by keeping the cash in an insured account at a bank.<\/p>\n\n\n\n

Another risk of keeping too much cash at home has to do with estate planning. If family members or other heirs discover sizable amounts of cash in a home, the cash becomes part of the estate, which can invite complications and even disputes or disagreements\u2014especially if the cash is not specifically mentioned in the will or other legal documents. In a sense, the cash is \u2018unofficial\u2019 since it has no ownership records, which can result in accounting problems and lack of clarity when it comes to distribution.1<\/sup><\/p>\n\n\n\n

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It’s crucial to focus on proper financial planning, particularly when creating a retirement portfolio. By investing wisely and documenting your assets clearly, you can ensure a smoother estate planning process and avoid the pitfalls of unaccounted cash.<\/p>\n\n\n\n

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A final reason I do not advocate for keeping too much cash in the home is opportunity cost. The proverbial \u2018money under the mattress\u2019 becomes less valuable with each day it\u2019s not earning interest, as inflation reduces the purchasing power of uninvested cash over time. Deposit rates at banks are not very high at the moment, but many are paying yields in line with current inflation rates\u2014which at least maintains purchasing power on that money. There are also other options for earning higher levels of interest, like money market funds and CDs, where people can earn a real return that\u2019s also very low risk.<\/p>\n\n\n\n

Going back to your question, I agree that having one year\u2019s worth of cash available for emergency purposes is a good idea. Having that cash in an interest-bearing savings account or parked in money market funds both works well, in my view. Beyond the years\u2019 worth of cash, I think people should invest their assets in accordance with longer-term growth, income, and liquidity needs. Keeping cash at home\u2014or having too much uninvested cash\u2014could mean sacrificing considerable wealth generation that could take place over time.<\/p>\n\n\n\n

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\u2022 Accurately forecasting your retirement income needs
\u2022 The two phases of determining your asset allocation
\u2022 Developing an investment discipline that allows you to get good results over time
\u2022 Avoiding self-sabotage\u2014what you need to know<\/p>\n\n\n\n

If you have $500,000 or more to invest, get this guide to learn our ideas on the step-by-step process of building and maintaining a retirement portfolio that will potentially help you reach your goals and enjoy a secure retirement.<\/p>\n","protected":false},"excerpt":{"rendered":"

Most financial planners advise having a year’s worth of expenses in cash, but how much of that should be physical cash kept at home?<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-13228","post","type-post","status-publish","format-standard","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13228","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=13228"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13228\/revisions"}],"predecessor-version":[{"id":13230,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13228\/revisions\/13230"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13228"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13228"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13228"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}