How Much Cash Should You Keep at Home? - Experian (2024)

FAQs

What is a reasonable amount of cash to keep at home? ›

“It [varies from] person to person, but an amount less than $1,000 is almost always preferred,” he said. “There simply isn't enough good reason to keep large amounts of liquid cash lying around the house. Banks are infinitely safer.”

The government has no regulations on the amount of money you can legally keep in your house or even the amount of money you can legally own overall. Just, the problem with keeping so much money in one place (likely in the form of cash) — it's very vulnerable to being lost.

Saving $5,000 in an emergency fund can be enough for some people, but it is unlikely sufficient for a family. The amount you need in your emergency fund depends on your unique financial situation.

The recommended amount of cash to keep in savings for emergencies is three to six months' worth of living expenses.

Most real-estate experts will tell you to have at least 5% of the cost of a house on hand in savings to account for the down payment. But that's only a minimum, and expectations can differ by community. In a city like New York, for example, minimum down payments are almost always 20%, no less.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

Hiding cash under the mattress, behind a picture frame or anywhere in your house always carries the risk of being misplaced, damaged or stolen. Unfortunately, there is no way to trace or reclaim lost or stolen cash. The money isn't growing. When cash doesn't grow, it loses some of its value.

At the time of writing there was no legal limit on how much money you can keep in your home. However, the impracticality of keeping large amounts of money safe and secure may outweigh the perceived benefits.

Though it is personal-finance gospel to save an emergency fund of three to six months of expenses, advisers say money should be collecting interest, not dust at the back of your sock drawer.

As of May 2023, more than 1 in 5 Americans have no emergency savings. Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022. Note: Not all percentages total 100 due to rounding.

How much money does the average person have in their bank account? ›

About 29% of respondents have between $501 and $5,000 in their savings accounts, while the remaining 21% of Americans have $5,001 or more. Few hold much cash in their checking accounts as well. Of those surveyed, 60% report having $500 or less in their checking accounts, while only about 12% have $2,001 or more.

The short answer to what happens if you invest $500 a month is that you'll almost certainly build wealth over time. In fact, if you keep investing that $500 every month for 40 years, you could become a millionaire. More than a millionaire, in fact. Investing is about buying assets you believe will increase in value.

It's a good idea to keep enough cash at home to cover two months' worth of basic necessities, some experts recommend. A locked, waterproof and fireproof safe can help protect your cash and other valuables from fire, flood or theft.

If you plan to deposit a large amount of cash, it may need to be reported to the government. Banks must report cash deposits totaling more than $10,000. Business owners are also responsible for reporting large cash payments of more than $10,000 to the IRS.

Carry $100 to $300

“We would recommend between $100 to $300 of cash in your wallet, but also having a reserve of $1,000 or so in a safe at home,” Anderson says. Depending on your spending habits, a couple hundred dollars may be more than enough for your daily expenses or not enough.

In its 2022 Survey of Consumer Finances, the Federal Reserve estimated that the average transaction account balance was $62,410, which included savings and checking accounts, money market accounts, call deposit accounts and prepaid debit cards. However, the median balance was much lower at $8,000.

Cash on hand can include funds from various sources, such as actual cash, bank accounts, and liquid assets that can be easily converted into cash. Determining how much cash on hand should be set aside depends on many factors, but it is generally advised to reserve between three and six months worth of expenses.