Cash isn’t as essential as it used to be, with plastic cards and money apps now widely accepted for payments. However, many individuals still keep some cash on hand, with the average American holding around $67, as per a Federal Reserve survey. If you’re unsure about the importance of carrying cash, you’re not alone. GOBankingRates consulted with financial advisors to get their insights on the matter.
Financial analyst James Mayo suggests carrying a modest amount of cash for preparedness, typically around $40 to $60, particularly useful when traveling or in rural areas. Similarly, financial advisor Kyle DePaolo recommends having $50 to $100 readily available for unforeseen circumstances.
There are several reasons why carrying cash can be beneficial: some establishments may only accept cash, it can be handy during technology outages, for easy tipping, traditional budgeting methods, acts of kindness, and as teachable moments for children about finances. On the other hand, not carrying too much cash is advised due to security concerns – if lost, cash cannot be recovered as easily as turning off a card.
Ultimately, finding a balance between carrying some cash for convenience and security, while relying on digital payment methods when suitable, is recommended.
According to Mayo, having your card replaced is also beneficial for preventing fraud. Unlike cash transactions, digital records from apps and credit cards can help you track your spending and serve as a useful budgeting tool. Mayo enjoys earning rewards for his purchases by using his card, but he makes sure to pay off his balance in full each month to avoid interest and fees. Check out more financial tips from GOBankingRates including luxury SUVs with upcoming price drops, steps to retire early, wealth-building shortcuts, and what to do when your savings hit $50,000. Read the full article on GOBankingRates.com for insights on why the average American carries $67 in cash and whether experts recommend more or less.
