Cash confidence

How much cash is too much cash?

Cash feels safe because the number does not bounce around on a screen. The trouble is, cash can quietly turn into avoidance. Sitting in the bank because investing feels frightening is not the same as sitting in the bank because it has a job to do.

Cash is not one thing.

Everyday cash, emergency cash, tax cash, goal cash, and money waiting on more investing education are not the same animal. The first job is to label the purpose. Once each pile knows what it is for, the question of “how much” gets a lot easier.

Too much cash can be emotional.

Cash can be a sign of prudence. It can also be fear wearing a respectable coat. If money is sitting idle because you do not understand investing, the next move is education, not panic, and definitely not a hot tip from a man at a dinner party.

The question is purpose.

Ask, of every pile: what is this money for, when might I need it, and what do I need to understand before deciding where it goes next?

Start with these questions.

• Separate everyday cash from safety cash.
• Know your emergency number.
• Name the money that is for future goals.
• Understand cash drag, conceptually, before doing anything about it.
• Decide which decisions need education before action.

Find your next step.

The Financial Power Audit will recommend the right starting rung on the CFC ladder.