Personal Finance Essentials

Cash Reserves

Understanding

Cash Reserves

This is the process of determining how much money you need to set aside so you can pay both known bills (ordinary daily living expenses) and unknown expenses (which arise from surprises and emergencies – everything from the car breaking down to your best friends announcing their engagement).

The key issues involve how much to set aside and where to maintain these funds, assuring that the money is safe, available whenever needed, and offers some protection against inflation.

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Why Cash
Reserves
Matter

Having adequate cash reserves can protect you financially when adverse or unexpected events occur.

Recommended Cash Reserve
Levels

Recommendations on what to maintain for your cash reserves.

Acceptable Places to Stash
Your Cash

Your money must not be at risk of falling in value, and it needs to be available to you at any time you need it.

The Important Rule About Your Cash Reserves

Your cash reserves have one function.

Where Cash Reserves Fit in Your Financial Plan

Cash reserves aren’t just a safety net — they’re the essential foundation that must be in place before investing, insuring, or anything else.