Cash On Hand – Slowly Build Up 1-Month Reserves For Living Expenses

Thursday, October 11, 2018
By Paul Martin

Ken Jorgustin

Do you have cash reserves for one month of living expenses?

We live in a largely cashless convenient modern era. The vast majority of today’s financial systems ‘money’ consists of invisible electronic digits.

These digits translate to numbers and balances in bank accounts, investment accounts, business accounts; they zip around the globe at light speed; they facilitate transactions ranging from one’s ordinary purchase of groceries to the complex chain of transactions that accompany ‘just in time’ inventory management from producer to end user (and everything in-between).

While digital transactions comprise the lions share of all money movement, cash is still accepted at most businesses. Although today’s young grocery store checkout person may have some difficulty ‘making change’ if you pay with cash (sarcasm – though sometimes true!) the fact is that cash is still ‘money’ (currency).

Fireproof Waterproof Cash Box

Why am I suggesting that it’s a good idea to build up (at least!) a one month cash reserve for living expenses? Especially given today’s primary method of electronic transactions using one’s debit or credit cards?

During a period of major emergency, even one’s best laid plans may ‘go out the window’. You may be prepared (or think that you are) but you may need something unforeseen.

Other than a complete collapse of the existing system, having cash on hand may be of some eventual benefit. Cash on hand to meet short-term and emergency funding needs.

And I’m talking about cash in your possession (not in ‘the bank’).

A ’emergency’ funding need may be defined in many various scenarios. It could simply be a time when you find yourself short of cash funds (for whatever reason).

Maybe the power went out because of a hurricane but the gas station down the street is selling gasoline (he has a generator and pump) but ‘cash only’. Now you can buy some and fill up your own generator.

Maybe your own generator conked out but someone who knows someone is selling one for $cash. Boom. Problem solved. Get the general idea?

Maybe you lose your job and suddenly find yourself short of funds. Now your cash stash will buy you some time.

Cash on hand is a forced savings. Except you are the banker. Not ‘the bank’.

The Rest…HERE

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