This week I was featured in Yahoo Finance talking about the lesson of “Cash is King” that my parents instilled in me from a young age. Well, these days I prefer to call it “Cash is Queen”. In today’s economy with market volatility, high inflation and uncertainty around our countries near-term economic future I think the cash is queen mentality is more relevant than ever.
Now you may be thinking ‘If I leave my money in cash isn’t it going to lose value?’ That’s a great question, I am so glad you asked. Yes, inflation as we discussed last week, means a dollar today will buy you less in the future. However, we won’t be keeping this cash on hand for long so let’s talk through a few of the benefits to having cash available.
Make sure to check out the Yahoo Finance article here!
With the market volatility on going some are apprehensive about investing in the market. However, depending on your risk appetite, time horizon, and goals it might be the perfect time for you to invest some of that extra cash. For the average investor without having cash on sidelines waiting to be invested there’s very few ways to get into the market. Keep in mind you need to make investments that are right for YOU, not what everyone else is doing.
In addition, cash can help you earn discounts. For example, my parents always negotiated with workers if we were to pay in cash. It helps them to avoid processing fees and even the processing time of checks. You can also take advantage of buying goods and services (those you actually use) in bulk or upfront. For example, having a subscription you pay for for the year is (typically) cheaper than if you were to pay for a shorter amount of time. In terms of goods you buy upfront, think Costco. I purchase my favorite tomato sauce at Costco knowing that I will use it but I save money purchasing it there. If a provider or service you are using doesn’t have this option it never hurts to ask.
Lastly, during times of uncertainty it doesn’t hurt to add a little cash to your emergency savings. Or if you don’t have an emergency savings now might be a good time to start one. An emergency savings or a larger amount of cash in your emergency savings will help cushion things should you not get the raise you planned on, see a reduction in your job, or unfortunately lose your job. As a rule of thumb it’s always good to keep 3-6 months of expenses in you guessed it-cash (well actually a high-yield savings account). With the economic uncertainty it might be worth it to add another month’s worth of expenses especially with the high levels of inflation that we are seeing.
Make sure to check out the Yahoo Finance article here!
