How Much Emergency Cash Should I Have?

Updated: May 01, 2023

You'll want to keep some cash at home in case of emergency. But how much is enough?

These days, we can complete almost any transaction without cash. We can order groceries to our doorstep, split a bill with a friend by transferring money, or buy an entirely new living room set without seeing any cash. Some people can go months without using physical cash, and for some transactions, you should never pay with cash.

However, it’s still king in a handful of situations. In a natural disaster or an emergency, cash could be your best option. If you’re asking yourself, “How much emergency cash should I have on hand?” we’re here to explain.

Don’t forget to check out the other situations where you should always pay with cash.

How much emergency cash should I keep around the house?

How much emergency cash you should keep on hand depends on your needs. If it’s you and a partner at home, you can probably get by with less than if you have a family of five to care for.

Michelle Schroeder-Gardner, a personal finance specialist from Making Sense of Cents, says for the average household, keeping about $500 in cash at home should be sufficient. “With easy-to-use money websites such as PayPal and Venmo, having cash on hand isn’t a significant need for most people,” she says.

Your personalized answer to “How much emergency cash should I have?” can be best calculated by taking a look at weekly expenses including groceries and gas.

This emergency cash is separate from an emergency fund or a sinking fund, which you might keep in the bank for emergencies like car repairs or vet bills. Your emergency cash at home is around to ensure you always have access to currency if your typical cashless transactions aren’t possible for a period of time.

Why should you keep emergency cash around?

Broken white ceramic piggy bank on a red backgroundPM Images/Getty Images

Unexpected events happen. Whether you live in an area prone to tornadoes, lava flows or ice storms, natural disasters can throw the online banking structure offline. In February 2021, an ice storm left millions in Texas without power or water for several days.

With no access to ATMs or cashless payment options, you might need some dough in hand. Having an emergency cash fund can ensure you have a way to restock basic groceries or bottled water if it becomes necessary during an emergency. It can also buy you a tank of gas, a hotel stay or a hot meal.

Emergency cash can also come in handy should you need to bail out a friend or neighbor. You might even find having emergency cash necessary to bail someone out of jail!

It’s smart to keep this emergency cash at home in a safe place, preferably in a waterproof bag. And one of the most important aspects of keeping emergency cash at home is to consider it off-limits for anything but a true emergency.