How Much Cash Should You Have on Hand?

How Much Cash Should You Have on Hand?

Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.

[christosemper]

Keep at least 6 months. We were just hit by a tornando and hail storm and prior to that had an HVAC go out. In just 3 months that’s 30k in expenses. Thankfully we saved more than we thought we needed

[Bob-yhir]

Depends on your age and future plans. We are nearing early retirement and so have build 4 years cash expenses with travel in there. That way we can ride out any couple years of bad markets or low returns and back fill the cash reserves in big up years. Only need to do that for about 6 years until we turn on SS a little early. That stream of income will cover all our household and travel needs alone ! So investment gains will just be funny money.

[Andarius]

My cash position is a balancing act. I keep about 9 months of expenses and enough to cover my deductibles as an absolute minimum. The rest is prepaying the next car, family vacations, etc. I just keep dumping into it for the larger purchases that I know will happen here and there so it doesn't throw me off of my automatic saving. I absolutely hate anxiety around money, so I'll probably bump the emergency portion of that cash over time, but I'm in no real hurry. 35% of gross goes towards retirement.

[kevinschultz]

I've seen this twice in the stock market:

1. In 2008, in the midst of that massive downturn, Ford was selling at 4 - like all other car manufacturers, they got hit hard. However, unlike every other company, they had already addressed the issues that lead up to everyone ELSE needing governmental bailouts. And so while they took the government loans like other car companies did, they explicitly stated "we don't actually need this - we're going to pay it back immediately. We're just doing this to calm the markets." So when it was at 4, I invested 10k (it was my emergency fund at the time), and sold when it was at 16 a few months later. I ended up getting a new(er) car with it.

2. Last october, Facebook/Meta stock crashed down to 80, during their first round of layoffs. However, every article I read about it considered that to be an undervalued stock, and most folks put out a tentative buy order on it (I think), even though it was a pretty crazy time. Now it's back up to 270 or so. Personally I didnt' invest anything (as most of my emergency funds were in bonds at the time), but I did console myself with the fact the fact that I have 100k or so in RSU's that I could let ride, instead. (In retrospect, I probably should have converted some of my Roth into that stock, just to take advantage of it. Ah, well.)

But yeah - it seems as though, if you're paying even casual attention, there are opportunities like this every decade or so.

[anthonyrussell]

Great video. We are all seeking for financial independence and a better way of life. This is not difficult to achieve with savvy investing, a frugal lifestyle, and cautious budgeting. I'm glad I learned early on to work hard for financial independence. As Warren Buffet said, he has seen this happen many times in his life. Not an investor, My husband and i never earned more than a middle class salary. We plan to get retired at 58 with a stock portfolio worth $4M. We have never sold so much as one share of stock.

[BrandonKTG]

6 months of expenses: 1-2 Months in Checking, 2-4 Months in High yield savings.
Invest the rest, extra cash savings are put into automated bond portfolio returning above 5.5% for purchases within the next year or so.

[rickchandler]

I probably have too much. I’m retiring in a couple weeks and have 4 years set aside. My thinking is since I’m retiring overseas, I’ve got the money stored in euros so if the conversion rate is garbage for me, then I’ll just live off the money in the account and wait for it to look better for me. My portfolio is in USD of course.

[BuyBBStonk]

31yo with 50% cash, because my investments are already covered and I like the peace of mind cash can give me to leave my work to travel or get into real estate if the market drops in the future.

[joelmoore]

I have a question. What do you do when you need to replenish your emergency reserves? My wife and I currently invest 20% of our income but do not have a large enough income to replenish our emergency fund without cutting back on investing. It would take a very long time. Our story is that we had a house fire on New Year’s Eve of 2020 going into 2021. We lost our home and three vehicles. We have since rebuilt the home and replaced our belongings. We are very blessed but our emergency reserves have been depleted. Do you recommend scaling back our investing to replenish the emergency reserves? I appreciate any advice. Thank you so much for all of the great work that your team does for the show! You guys are great!

[JakeSpradlin]

Personally I think it depends on if the market as a whole is over or under valued. If market is undervalued I’ll be light on the cash

[jordanmadden]

Keep a portion you think you could realistically need in an emergency in cash. Keep a secondary portion in a relatively safe but invested taxable account. You can get money out of a taxable account in a week or 2. That’s liquid enough imo.

[LB-lxgt]

I heard the start of the video and was like I'm not on step 7?! My doppelganger seems to be speeding past me.

[gregthompson]

Was at work one day, found a non listed used truck for sale by owner on Thursday. Got off work late after business hours which means pulling money out was not possible. Had cash and went next day too pay for this truck. No cash on hand this would of not been possible in short time.

[jhammons]

You guys always talk about Roth like it’s best for everyone, but I have a significant portion of my income in the 32% tax bracket. Should I still be trying to contribute to Roth while I make a low enough income? Or should I be prioritizing Traditional tax-deferred accounts? Thanks.

[ImVeryBrad]

We had 10k but it was too much. Now we keep 3-4k usually. We both have full time jobs so im not too worried

[BusterDarcy]

Time in the market beats timing the market. If you have your emergency fund covered and you have extra cash leftover after you contribute to your investments, contribute more to your investments. Holding it in cash and hoping the market crashes is just gambling.

[alk]

I'm not sure why it's so difficult for people to say it out loud - dry powder is market timing unless you deploy it based on business/investment opportunities that have nothing or little to do with broader market. I don't know why this is so difficult for people to wrap their heads around. You either hold dry powder for when the market goes down, or you advocate for time in the market over timing the market. You can't have it both ways.

[MrOfficer]

Aim for one year's salary in cash in a HYSA

[chemquests]

Keep some cash in the house in case of natural disaster where you can’t access the bank or use cards

[Mike-gwwo]

Soooo you’re not going to tell us???.?