Buzz
In many places, cash is no longer the standard. While it's possible to live solely using bills and coins, it's inconvenient and rarely chosen. Many people don't even carry cash anymore, relying entirely on their phones and cards, using contactless payments, card readers in stores, or apps like Bizum, Venmo, or Cash App to settle personal debts that would have once been resolved with cash in hand.
Typically, when discussing the importance of having an emergency fund, we refer to money deposited in a bank account, not a stack of bills hidden under the mattress. Keeping savings in a bank offers interest, protection against theft, and access from anywhere.
While all of that is true, cash remains a highly useful resource. In an emergency, it could even become a necessity. That's why it's wise to keep a modest amount at home, but what exactly is the right amount?
Coins and bills can save you in a pinch
It's true that cash is no longer necessary for most daily transactions. Stashing a few bills in a safe or hiding them in various spots around your home might seem like a waste of time or resources. However, this couldn't be further from the truth. Here are two compelling reasons to do so:
If there's a power outage, you might need it. Natural disasters like hurricanes or floods can easily disrupt the power grid, leaving entire cities in the dark. Restoring power often takes time, as seen after Hurricane Sandy in 2012. In some areas, it took nearly two weeks to restore electricity; Puerto Rico, for instance, still faces challenges returning to normal after a series of severe storms. Power outages not only prevent you from charging your phone and other devices but also stop businesses from accepting electronic or digital payments. Sometimes, they can even cause entire data networks to collapse, temporarily sending us back to the Stone Age. Having cash on hand to buy essentials can be crucial.
It's a (nearly) universal payment method accepted everywhere. Beyond power outages and dead phones, you might encounter people who don’t use the same payment apps as you. You won’t be able to send them money via Venmo or Bizum, for example, if they don’t have accounts with these services. In urgent situations, the patience required to download and set up a new app from scratch will likely be in short supply.
How much you should keep
We’ve established that having some spare cash on hand is always a good idea, but don’t overdo it! Just as your general emergency fund should cover several months of expenses, when it comes to cash, the ideal amount is enough to cover about a week of essential costs, such as gas, groceries, or medications, and just enough to pay for a night or two in a hotel or hostel in case of a more serious setback.
The exact amount you need to cover these expenses will vary depending on the size of your family and their needs. Generally, a sum between $500 and $1000 should suffice for an emergency, though having at least $200 on hand can already be a big help. It’s likely not wise to keep larger amounts at home—your money will be safer in the bank, where it’s protected and can earn interest.
If you want to calculate this amount more precisely, make a list of weekly essential expenses (food, bottled water, medications, and other necessities for your family) and add the cost of a one-night stay at a nearby hotel. Round up the total to the nearest hundred, and you’ll have a good estimate of how much you should safely set aside.
There are three key considerations when storing cash at home:
Devaluation. The $500 you stash today will lose value over time. That’s why we recommend checking and adjusting the amount periodically to ensure you always have enough cash on hand.
Deterioration. Bills have a limited lifespan. While money in circulation wears out from being passed around, bills stored at home can also degrade over time. Keep them in a secure place, away from moisture, fire, and curious children who might turn them into confetti. You can also exchange old bills for new ones every few years.
Overspending. Knowing you have cash at home might tempt you to use it for tips, paying back friends, or small purchases where using a card feels inconvenient or awkward. Before you know it, your emergency fund could vanish. Unfortunately, these things always seem to happen at the worst possible time.
