How Much Cash Should I Carry?

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This is a very common question that people come back to and reevaluate time and time again. And really I would say that less cash = less risk. We live in an age where we can pay for almost anything with a credit card, heck we can even use our smartphone (although I wouldn’t endorse using ALL the apps available on smartphones to pay for things) and don’t even need to carry a purse or wallet.


Even if we get mugged, we can call and cancel our credit cards. But the cash we carry is gone forever and there’s really nothing we can do about it. Except learn from it and perhaps carry less in the future. But how much is really enough?



Cash VS Credit Psychology


Studies have shown that it’s more painful from a psychological standpoint paying for things in cash rather than credit. And paying for items in credit “dulls the ‘pain of paying’ for two important reasons: (1) there is a separation in time between when the credit card is used to buy something and when the bill has to be paid; and (2) using a credit card allows different purchases to be mixed together” (


So in favor of this study, I may be going against the popular consensus to say that we should be carrying more cash to prevent ourselves from frivolous spending and having our psychological better half come into play. The article mentions several studies which favor purchasing good and services using cash rather than credit cards including the above from the Journal of Experimental Psychology: Applied. In another article from the Chicago Tribune, consumers who use credit to purchase may focus on an items features, brand, recognition rather than price, warranty, and installation.



For Everyday Cash


What do you really use it for is the first question? I typically use it for lunch money at work. Usually, I bring lunch, but one or two days out of the week I’ll eat out which costs $6 on the low range and less than $10 on the high range. So,


I usually carry anywhere between $20 – $40 in my wallet at any time during the month. If you have a credit card AND are disciplined (the second part is very important), then you don’t need to carry a lot of cash. I’ve noticed that places which accept cash gas stations with really cheap prices (e.g. Free State Gas Station’s in my home state of Maryland), food merchants where you need a minimum amount of your total purchase for them to accept a credit card, some dry cleaners, or when a spouse or loved one needs some cash and you ask them why and they respond with “don’t worry about that” 🙂



Getting a Bargain Deal May Involve Paying With Cash


If you find someone selling a nice leather couch you know is worth close to $1,000 and it’s on Craigslist or Offer Up for $425 and you’ve bargained down to $400, most likely they’ll only accept cash. In this case, a special trip to the bank would be needed. If you’ve sold anything in the past on one of these sites, chances are you were only willing to accept cash too (unless you were greedy and willing to accept a check from a Nigerian business for more than 20 times the value of an item that would be sent certified mail all while providing your routing number, account number, blood type, hair sample…. ok let me stop there 🙂


Cash Usage During Travel


You may need more cash during travel because you do more things you don’t normally do when you’re not otherwise traveling. Does that make sense? Ofcourse it does. This includes things like


  • Tipping at restaurants


  • Paying for tolls


  • Snacks in vending machines


  • Other food places where you don’t have a card that allows for free foreign exchange transactions


Yes, I understand all these places are starting to take cards if they already don’t anyway. But at the same time, the cash keeps you in check in terms of how much you are spending and it’s according to the budget you originally put together. You do budget for your trips right? Oh of course you do. 🙂



Pros & Cons of Carrying Cash




  • More cognizant of your spending (psychological aspect).


  • Don’t have to reconcile to a bank or credit card statement (better hold onto that receipt if you want a paper trail though).


  • Maybe you can treat yourself. Let’s say you started out with $50 at the beginning of the month. And you only spent $25. At the same time, you didn’t use your credit card either in situations where you budget to spend using cash (e.g., my lunch example above). Well then live a little and grab a frozen coffee on a Friday afternoon like me!




  • Purse or Wallet gets stolen (hey at least they don’t have your credit cards since you’re only carrying cash).


  • If you use cash instead of a card, you may sacrifice points/rewards which can eventually add up and result in bonus cash, merchandise, miles, etc. But this can be a pro in the cash section too as people may be enticed to use their credit card more, again for frivolous things, just to get more points. This was concluded in a study in 1986 that the use of credit cards stimulates our desire to spend more in the Journal of Consumer Research, published by the Oxford University Press.



So what are your thoughts about carrying cash?  How much is too little and how much is too much?





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