How Much Cash Should You Keep at Home for Emergencies?

One of the biggest issues that Americans face is not having enough savings. Among the different age groups, most Americans have savings of less than $50,000.

As we can see, saving up cash is a challenge. It’s very important to have cash saved for a rainy day or for emergencies.

How much cash should you keep at home for emergencies?

We’ve prepared this short guide to help you out.

The Guide on Saving and Keeping Money for Emergencies

We want you to always have enough money for emergencies. Most Americans fear that they will not be able to survive during hard times.

As a side note, if you have difficulty getting cash, you should read more about payday loans.

If you follow these steps, you won’t have this worry.

1. Piggy Bank

Yes, piggy banks are not out of style. One of the best ways to accumulate savings is to always keep your spare change in a piggy bank. When the piggy bank gets full, exchange these coins to cash.

Once you have the cash, you wonder how much cash you should keep. Should you put some in the bank? We suggest keeping all of it in cash. A small piggy bank may bring you a few hundred dollars. Whereas a large piggy bank may bring in $1,000.

The purpose of a piggy bank is to save for emergencies. Assume that all money that accumulates in your piggy bank should be saved and kept in cash at home.

2. How Much Should I Save?

What about the other options apart from putting loose change into a piggy bank?

You might be wondering how much you should save from your salaries and investments. The best way to calculate this is to first calculate the average of your monthly bills. You should aim to have this amount plus a half (at the very least) saved up at any time.

For example, if you spend an average of $1,000 per month, you should have at least $1,500 in cash at any time. This way you can always have the cash to cover your necessities or emergencies and you’ll also have a bit extra. 

3. What About Investments?

You might be investing your money into assets, stocks, cryptocurrency, etc. You may wonder when you should liquidate your investments into cash. 

You should always seek the advice of a financial advisor for this. We also encourage you not to keep withdrawing from your investments. After all, they are meant to be held in the long term.

However, it may help to withdraw up to 10% per year of your investments. For example, if you made a profit of $5,000 in cryptocurrencies in a year, withdraw $500, and keep it in cash. If your returns are bigger, you may consider withdrawing each month as opposed to each year.

You may also want to look into holding your emergency cash in various currencies in case the dollar or any other currency loses its value.

How Much Cash Should You Keep at Home for Emergencies? As Much as You Can

Now that you know how much cash should you keep at home for emergencies, you should have the discipline to save cash regularly. Make sure you keep it safely in your home for a rainy day.

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