How Much Cash Should I Have on Hand?
How much cash should I have on hand is not as simple a question to answer. The answer to this question is different for everyone, as it depends on their risk tolerance and situation.
This post is about how much cash should I have on hand.
Let’s dive into how much cash should I have on hand in these top 3 accounts:
1. Checking Account
This account you should utilize to keep money for bills and expenses. Perhaps keep a buffer in case something happens and bill transfers don’t go through. Also, depending on when you’re planning on spending the money, you can also keep sinking funds in this account. Mainly if you are planning on spending it within the month, then it should be transferred into this account so you have the funds when you need to spend it.
2. Savings Account
This is the account to park your emergency fund and sinking funds in! So this can be at least 3-6 months (or however long you’re comfortable with) of expenses for your emergency fund.
Remember not to put these funds in a traditional brick-and-mortar savings account though! These should go into a high yield savings account, so you make the best bang for your buck while keeping your funds liquid enough to access easily.
3. Investment Account
No cash or very little cash should be kept in this account. If there is any cash, it should be quickly invested or withdrawn! This account is to help you build wealth by making money with existing money. In the event you need to cash in on some of your investments, remember to transfer that cash out to your bank accounts. Otherwise, you can’t use it.
To reiterate, how much cash should I have on hand in these the top 3 accounts are:
- Checking Account
- Savings Account
- Investment Account
There you have it! Interested in learning more about where to park your sinking funds? Check this post out for the best high yield savings accounts.
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