How much cash on hand should one have?
You seem to have a grasp of the basic principles involved, but your estimation of the risk you are taking seems a bit low. Your non-investment reserves are unlikely to cover your expenses for more than a month, so the chance that you would need to sell investments to cover additional expenses is high. You mention that I am flexible with the 'cash on hand' amount. For instance, for about three months I put a very tight spending/investing freeze on my life because I knew I'd be leaving jobs and moving (I already had the other job lined up). Those savings presumably went toward moving expenses, as your usual savings were insufficient. In the event that you are laid off suddenly, you might find yourself in the same position again, with added unplanned expenses like fees for breaking a lease. Your current plan involves selling investments to cover the gap. Based on your age you have probably only invested in a predominantly positive market, so the chance that you might need to sell investments for cash seems like a reasonable trade-off for the added potential gains. Your perception might change if the markets go south and you are forced to sell into a down market, possibly at a significant loss. You also don't indicate if your investments are currently sufficient to cover an extended period of unemployment. You are taking on a lot of risk under your current plan. Essentially you are trading possible investment gains for flexibility and time. By making small changes like saving at least enough to move as you did previously, you can give yourself time to react to job loss or other unexpected financial need. Rather than give the traditional emergency funds advice, I suggest you look at the broader picture. The total amount of savings/risk is up to you, but you should consider your current savings as insufficient to rely on as a safety net. There are two or three issues here. One is, how quickly can you get cash out of your investments? If you had an unexpected expense, if you suddenly needed more cash than you have on hand, how long would it take to get money out of your Scott Trade account or wherever it is? I have a TD Ameritrade account which is pretty similar, and it just takes a couple of days to get money out. I'm hard pressed to think of a time when I literally needed a bunch of cash TODAY with no advance warning. What sudden bills is one likely to have? A medical bill, perhaps. But hey, just a few weeks ago I had to go to the emergency room with a medical problem, and it's not like they demanded cash on the table before they'd help me. I just got the bill, maybe 3 weeks after the event. I've never decided to move and then actually moved 2 days later. These things take SOME planning. Etc. Second, how much risk are you willing to tolerate? If you have your money in the stock market, the market could go down just as you need the cash. That's not even a worst case scenario, extreme scenario. After all, if the economy gets bad, the stock market could go down, and the same fact could result in your employer laying you off. That said, you could reduce this risk by keeping some of your money in a low-risk investment, like some high-quality bonds. Third, you want to have cash to cover the more modest, routine expenses. Like make sure you always have enough cash on hand to pay the rent or mortgage, buy food, and so on. And fourth, you want to keep a cushion against bookkeeping mistakes. I've had twice in my life that I've overdrawn a checking account, not because I was broke, but because I messed up my records and thought I had more money in the account than I really did. It's impossible to give exact numbers without knowing a lot about your income and expenses. But for myself: I keep a cushion of $1,000 to $1,5000 in my checking account, on top of all regular bills that I know I'll have to pay in the next month, to cover modest unexpected expenses and mistakes. I pay most of my bills by credit card for convenience --and pay the balance in full when I get the bill so I don't pay interest -- so I don't need a lot of cushion. I used to keep 2 to 3 months pay in an account invested in bonds and very safe stocks, something that wouldn't lose much value even in bad times. Since my daughter started college I've run this down to less than 1 months pay, and instead of replacing that money I'm instead putting my spare money into more general stocks, which is admittedly riskier. So between the two accounts I have a little over 2 months pay, which I think is low, but as I say, I'm trying to get my kids through college so I've run down my savings some. I think if I had more than 6 months pay in easily-liquidated assets, then unless I expected to need a bunch of cash for something, buying a new house or some such, I'd be transferring that to a retirement account with tax advantages. Less than 2 1/2% of all US currency actually exists.  The rest is digital entries.  In a financial crisis you'll need lots of rare cash.  Twenty dollar bills are the best choice.  Stash as many as you can afford to.  Best to stash in a anchored security safe.  And for goodness sakes, don't tell anyone.
Find a good commercial bank in the us, or almost any bank in Canada, and exchange cash. Or use an ATM card in Canada; the surcharge is often minimal. (Check with your bank before traveling). You may or may not get a good exchange rate from your hotel desk; some view it as a courtesy, others as a service. You may be able to simply pay with American cash, near the border, but check the exchange rate. Or, for small amounts, you can simply not worry about whether you're getting the best possible exchange rate or not. I visit Canada periodically, and I use a mix of these solutions. Including that last one. With a lot excess cash you eventually have two goals: Since interest on cash bank deposits does not exceed inflation and you have currency risk, you may want to get into other asset classes. Options that might be, but not limited to are: I usually get a cashiers check to cover about 90% - 95% of the expected amount (whatever I think is just below my wet-dream-price), and bring the rest in cash. That doesn't require so much cash to be carried. Alternatively you can write a personal check for the exact reminder, or go to the bank for the reminder after the deal is made - with the majority already paid in a cashiers check nobody would disagree. I had great difficulty buying my $17,000 truck for cash.  One TD Canada Trust branch only let me have $5,000, the other branch down the street only $3,000.  They both said they were low on cash.  They kept trying to convince me to use a bank draft, but I didn't have a name or total amount as I was still shopping around.  I don't think banks carry much cash and it wouldn't take much to clean them out. "Nobody has mentioned your ""risk tolerance"" and  ""investment horizon"" for this money. Any answer should take into account whether you can afford to lose it all, and how soon you'll need your investment to be both liquid and above water. You can't make any investment decision at all and might as well leave it in a deposit-insured, zero-return account until you inderstand those two terms and have answers for your own situation." (in response to last comment to me) Ok. I understand now. Forgive me if I appeared to be splitting hairs. When it comes to understanding, exact wording is important. I keep money at home, enough to not be a frequent ATM user, not enough to imply any distrust of the banking system or preparation for Armageddon. You last comments implies the brochure said 13% keep all their money at home, i.e. have no banking relationship. A recent poll concluded 25% of people had less than $2500 available if they had an issue, such as the need to repair a car, or furnace. From that factoid, it wouldn't surprise me that half of those people have no bank acount at all. Not for lack of trust, but lack of money to deposit. "The above answers are great. I would only add to the ""rainy day"" part, that even though the cash provides a good cushion, ""a stormy day"" could mean even losing those emergency savings to the unignorable randomness that governs the world economy. Though unlikely, what happened to the russian ruble and the latest decision of the swiss cental bank are just two recent reminders that uncertainty must be treated as a constant. I would therefore advise you to invest some of the money in land capable of agriculture. How expensive is land over there in the UK?" "It's a real pain in the rear to get cash only from a bank teller (the end result of cutting the card as suggested). There is a self control issue here that, like weight loss, should ultimately be addressed for a psychologically healthy lifestyle. You don't mention a budget here. A budget is one of the first tools necessary for setting spending limits. Categorizing your money into inviolable categories, such as:  will force you to look at any purchase in context of your other needs and goals. Note that savings is at the top of the list, supporting the aphorism to, ""Pay yourself first."" Make realistic allowances for each budget category, then force yourself to stick to this budget by whatever means necessary. Cash in several envelopes labeled with each category can physically reinforce your priorities (the debit card is usually left at home for now).  Roll remaining funds from each month over into the next month to cover irregular larger expenses, such as auto repairs.  What sort of investing are we talking about? If you are just talking about retirement savings, an automatic deduction of just $50 to a Roth IRA account at a discount brokerage every pay check is a good start. An emergency fund of 6 months expenses is also common financial advice, and can likewise be built from small automatic deductions. In defense of wise use of plastic, a debit card can be a great retroactive budgeting tool because it records all spending for you. It takes a lot more effort to save and enter receipts for cash, and a compulsive spender without a budget is just as likely to run out of money whether or not he uses plastic. You could keep receipts in the envelope you take the cash out of when you're getting started. If you are so addicted to spending that you must cut your debit card to enforce your budget, at least consider this a temporary measure to get yourself under control. When the bank issues you a new card, re-evaluate this decision and the self control measures you've implemented to see if you've grown enough to keep the card." "Coming from an area that is hurricane prone, and seeing what happens to local businesses during evacuations/power outages/gas shortages, I think what you already have on hand should be sufficient. And it sounds like that's exactly what you're budgeting for.  I'd say 2 weeks worth of fuel and food costs, with the budget for each in line with riding out a natural disaster. True ""Preppers"" would say keep your money in gold buried in the backyard surrounded by land mines, but that's not perhaps what you're looking for. It is not uncommon for gas stations and grocery stores to revert to cash only sales, especially if they're not big chain operations. If the internet is out, or power is spotty, they may not be able to process CCs. Again, think smaller or more rural businesses. I have seen gas stations switch to cash only during gas shortages as well to help limit how much fuel people were buying.  $250 should get you through fine unless you drive a tank and need steak every night. You could probably go with less, but it's entirely dependent on your needs. As Joe rightly stated in his answer, if it's desperate enough times that you can't use a CC or debit card, cash may not even be useful to you." "Trying to figure out how much money you have available each day sounds like you're making this more complicated than it needs to be. Unless you're extremely tight and you're trying to squeeze by day by day, asking ""do I have enough cash to buy food for today?"" and so on, you're doing too much work. Here's what I do. I make a list of all my bills. Some are a fixed amount every month, like the mortgage and insurance premiums. Others are variable, like electric and heating bills, but still pretty predictable.  Most bills are monthly, but I have a few that come less frequently, like water bills in my area come every 3 months and I have to pay property taxes twice a year. For these you have to calculate how much they cost each month. Like for the water bill, it's once every 3 months so I divide a typical bill by 3. Always round up or estimate a little high to be safe. Groceries are a little tricky because I don't buy groceries on any regular schedule, and sometimes I buy a whole bunch at once and other times just a few things. When groceries were a bigger share of my income, I kept track of what I spent for a couple of months to figure out an average per month. (Today I'm a little richer and I just think of groceries as coming from my spending money.) I allocate a percentage of my income for contributions to church and charities and count this just like bills. It's a good idea to put aside something for savings and/or paying down any outstanding loans every month. Then I add these up to say okay, here's how much I need each month to pay the bills. Subtract that from my monthly income and that's what I have for spending money. I get paid twice a month so I generally pay bills when I get paid. For most bills the due date is far enough ahead that I can wait the maximum half a month to pay it. (Worst case the bill comes the day after I pay the bills from this paycheck.)  Then I keep enough money in my checking account to, (a) Cover any bills until the next paycheck and allow for the particularly large bills; and (b) provide some cushion in case I make a mistake -- forget to record a check or make an arithmetic error or whatever; and (c) provide some cushion for short-term unexpected expenses. To be safe, (a) should be the total of your bills for a month, or as close to that as you can manage. (b) should be a couple of hundred dollars if you can manage it, more if you make a lot of mistakes. If you've calculated your expenses properly and only spend the difference, keeping enough money in the bank should fall out naturally. I think it's a lot easier to try to manage your money on a monthly basis than on a daily basis. Most of us don't spend money every day, and we spend wildly different amounts from day to day. Most days I probably spend zero, but then one day I'll buy a new TV or computer and spend hundreds.  Update in response to question What I do in real life is this: To calculate my available cash to spend, I simply take the balance in my checking account -- assuming that all checks and electronic payments have cleared. My mortgage is deducted from my checking every month so I post that to my checking a month in advance. I pay a lot of things with automatic charges to a credit card these days, so my credit card bills are large and can't be ignored. So subtract my credit card balances. Subtract my reserve amount. What's left is how much I can afford to spend. So for example: Say I look at the balance in my checkbook today and it's, say, $3000. That's the balance after any checks and other transactions have cleared, and after subtracting my next mortgage payment. Then I subtract what I owe on credit cards. Let's say that was $1,200. So that leaves $1,800. I try to keep a reserve of $1,500. That's plenty to pay my routine monthly bills and leave a healthy reserve. So subtract another $1,500 leaves $300. That's how much I can spend. I could keep track of this with a spreadsheet or a database but what would that gain? The amount in my checking account is actual money. Any spreadsheet could accumulate errors and get farther and farther from accurate values. I use a spreadsheet to figure out how much spending money I should have each month, but that's just to use as a guideline. If it came to, say, $100, I wouldn't make grandiose plans about buying a new Mercedes. If it came to $5,000 a month than buying a fancy new car might be realistic. It also tells me how much I can spend without having to carefully check balances and add it up. These days I have a fair amount of spending money so when, for example, I recently decided I wanted to buy some software that cost $100 I just bought it with barely a second thought. When my spending money was more like $100 a month, lunch at a fast food place was a big event that I planned weeks in advance. (Obviously, I hope, don't get stupid about ""small amounts"". If you can easily afford $100 for an impulse purchase, that doesn't mean that you can afford $100 five times a day every day.) Two caveats: 1. It helps to have a limited number of credit cards so you can keep the balances under control. I have two credit cards I use for almost everything, so I only have two balances to keep track of. I used to have more and it got confusing, it was easy to lose track of how much I really owed, which is a set up for getting in trouble." It just takes a decent power outage to make it worth having some cash on hand.  It's possible that worse things can happen as well -- things that would shut the financial system down or cause bank runs. It is an assumption that you'll always be able to (a) access your money at your bank, either via teller transaction or ATM, and (b) pay with a debit card or credit card.  If either (or both) of these abilities are taken away, you'll be glad you have some cash. The amount that you have on hand (how much you want to hedge against these possibilities) is up to you. "Most of your money doesn't exist as physical cash, but simply as numbers in a ledger. At any given time, banks expect their clients to withdraw a certain percentage of their balances... For instance, checking accounts are frequently drawn down to zero, savings accounts might be emptied once our twice a year, CDs are almost never withdrawn, etc. To cover those withdrawals, banks keep a certain amount of physical cash on hand, and an additional amount remains on the ledgers. The rest gets loaned out to their customers for use in buying homes, cars, credit cards,etc. Anything they can't loan out directly gets deposited with the federal reserve or loaned directly to other institutions who need it. However, those last two options tend to be short term (ie overnight) loans. With debit cards functioning 24/7, you could get cash at an atm or make a purchase anytime of the day our night. The weekend has nothing to do with it. Which is a long way of saying ""No, they do it all the time, not just on weekends"" ;)" "It's like the lady said, ""It's not the size that counts, honey -- it's the wiggle behind it.""  Or to be more precise in application of metaphor, it's not the amount of money but *where it goes* that matters. Currency is like blood: It's supposed to circulate, but when it pools into large pockets, well, that's a good sign you're dead." Depending on the country, nothing.  For example, the US has about $1.3 trillion dollars of cash in circulation.  Which means that if you were to burn a million dollars of it, that would be 0.000077% of  the circulating cash.  But cash is a small portion of the actual money in the US.  Only about 8% of all money is in cash, the rest is in other forms of value, which means that you'd only be destroying 0.0000062% of the US's money if you burned a full $1,000,000. Generally, I consider it bad etiquette to inconvenience others.   I would recommend cash for small purchases. Try to offer as close to the required amount as possible.  Don't pay with several dollars worth of change if you can avoid it. You shouldn't need to carry a lot of cash.  When you do don't make it obvious.