Personal Finance

How Much Cash Should You Carry

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 4 minute read

When I visit my family in Florida, my dad constantly asks if I brought any money. He doesn’t have to borrow any because of this. My father is of the opinion that people should always have cash on hand for unforeseen circumstances. Nine times out of ten, I have to inform my dad that I cannot afford to give him money. He frequently gives me a twenties under the table.

My father’s worries about my lack of cash on me are well-founded. To be on the safe side, we should all keep some cash on us at all times. Not that I advocate carrying a lot of cash with you; nobody wants their possessions stolen or lost. In a world where plastic is the norm, cash still has its uses.

8 reasons why you should always have some cash on hand are listed below:

1. Bill-Splitting

Going out to eat with your pals and splitting the check? Even while some eateries have the technology to produce individual checks, it is usually more convenient and expedient to settle up as a group. 

In the same vein, if you and a friend want to share a purchase, cash makes it much simpler to do so. If one party pledges to pay and then fails to do so later, the other may be left footing the entire bill. In addition, it could be cumbersome to have to go to the bank or an ATM to cash a check.

2. Tipping

My sister-in-law works as a server at a fancy restaurant, and she told me that she would much rather be tipped in cash than have the option of using her tip credit. All of the cash tips she receives are hers to keep. 

She tips her busser directly instead of going via the establishment’s management, who keeps a portion of all cash tips as profit. If you’re planning on having a sit-down meal, it’s polite to have some dollar dollars for tipping.

3. Should You Be Unable To Use A Card

Credit and debit card payments appear to be accepted everywhere these days. This is generally accurate. However, some establishments are cash-only. One time I took a taxi van to the airport and discovered to my dismay that they only accepted cash. 

Everyone in the van had to wait while I accessed my bank account. They were obviously quite upset with me. One such place where you can only pay with cash is a vending machine. 

Although some vending machines do accept credit cards, the vast majority do not. If you’re parched, especially after exercising, you might have to resort to buying a drink from a vending machine. When my mom and I go for a run at the park, we always bring a little cash with us.

4. In the Event Of A Crisis

Always be ready for anything that may come your way. Make sure you have enough money on hand to pay a tow truck if you break down on the road without access to AAA or another roadside assistance program. One of the best ways to protect yourself when traveling is to always carry some cash.

5. Card Suspended

Some places that provide emergency services take credit cards, but you never know when they might fail you. So what happens if your payment is declined? It’s possible that your credit card company has temporarily frozen your account due to suspicion of fraudulent activity. 

I hope you didn’t max out your credit card (the Golden Rule of credit cards). What happens if you try to use your debit card but don’t have enough money on it? Never put off paying off a credit card until you absolutely have to, because you never know when you might need it. Surprisingly, a growing number of Americans are opting out of using credit cards in favor of cash.

6. Envelope System

To successfully use the envelope budgeting strategy to reduce or eliminate debt, you must always have the necessary funds on hand. Otherwise, your budgeting efforts will be futile, and you will continue to overspend. 

This approach works so well because you can watch your money being spent or put away in real-time. The lack of funds prevents this from happening. You can also implement the same approach utilizing an online personal finance management platform, such as Mvelopes.

7. Tolls

A few months back, I drove to Orlando and had to traverse multiple toll highways. I neglected to make preparations in advance, despite the fact that I was aware I should take them. 

I had no money with me when the time came to drive. I had to complete paperwork and submit a reimbursement request to the Florida DOT for each of the five toll plazas I used. If I had been carrying money at the time, I could have avoided the whole ordeal.

8. Mug Cash

A friend of mine always keeps twenty dollars on him in case he gets robbed. He believes that if he gives the attacker the $20, the mugger will be satisfied and leave him alone. I’m not sure whether this actually works, but I’d much prefer to give a thief $20 than my credit or debit card!

Do you keep cash in your wallet or purse? How about in your glove box? How much do you typically bring with you?

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