You may have heard money expert Clark Howard recommend that everyone should keep some cash at home in case there’s an emergency that affects our banking systems, but exactly how much cash should you keep on hand?

We went straight to Clark himself to get some clarification…

How Much Cash Do You Need to Keep On Hand for an Emergency Situation?

Clark says that how much emergency cash you need is not a one-size-fits-all situation.

“It depends on daily cash needs,” he says. “Figure you need to cover three days of ‘walking around’ money. Whatever you would typically charge or use a debit card for over a three day period, that’s what you need to have on hand.”

Here’s one way to figure out what your ideal amount of cash to keep on hand would be:

  1. Look at a month from the last year in which you didn’t have any large, out-of-the-ordinary expenditures.
  2. Add together your total credit and debit card expenditures, plus any money you withdrew from ATMs that month.
  3. Divide that number by 10 and, voila, you have a pretty good idea of how much cash you might need to cover you for three days.

Clark says he has a simple rule: “I have $400 in cash on hand. No one will find it if they come looking for it, but if I don’t have access to money otherwise, I know that I have that much. $400 can cover a lot of things in the event that global banking systems are not available.”

One thing to consider is that if there is a true cash crunch, you probably don’t want your entire emergency stash to be big bills like $100s and $50s. You’re much more likely to be able to spend your cash and get change with denominations of $20s, $10s, $5s and $1s.

Final Thought

Keep in mind that you should also have a more general emergency fund that you can tap into if unexpected circumstances arise. This should not be cash that you keep in your home, but should be money you can access quickly if you need to pay a surprise medical bill or repair your vehicle.

“If you don’t have savings, then you’re not prepared for the ‘oops’ in life,” Clark says. “Because ‘oops’ happen — all different types and sizes, and a lot of times we’re not in a position to deal with them.”

Hopefully, one of those “oops” won’t be our banking systems going down but at least with some cash on hand for an emergency, you’ll know you’re prepared if that does happen.