Card outages and bank app problems remind people that some cash at home can be useful. Too much, though, earns nothing and is at risk of loss or theft. A simple split works for most households.
Cash at home: a few days of essentials
Enough for groceries, fuel and small emergencies for a few days, often a few hundred in local currency, in small notes. That covers a short outage without turning a drawer into a savings account.
Emergency fund: in an insured savings account
The main emergency fund (commonly three to six months of essential costs) belongs in an easy-access savings account covered by deposit insurance. Compare the rate with what other banks pay: many old accounts pay far less than current best rates.
Check the tax side
In some countries savings interest above an allowance is taxable. Tax-free wrappers (such as cash ISAs in the UK) can help keep more of the interest.
Free tools
- Emergency fund calculator
- High-yield savings calculator
- Emergency fund spreadsheet (free CSV)
- Sinking Funds Tracker
General information, not financial advice.