With the proliferation of smartphones and the changes in payment methods caused by the COVID pandemic, consumers mostly opt for digital payment methods like e-wallets and various types of credit cards when shopping. But does this mean that carrying cash is obsolete? Not quite, as most people still carry a small amount of cash, which financial planners say is a wise move.
Worldpay’s Global Payment Report for 2024 revealed that in 2023, digital wallets accounted for 50% of global e-commerce spending (over $31 trillion) and 30% of global point-of-sale spending (over $10.8 trillion), making it the fastest-growing payment method. The market share of cash decreased by 8% in 2023.
The report also highlighted that cash remains a vital payment tool for billions of consumers worldwide. In 2023, cash accounted for 16% of global transaction value ($6 trillion). Among the 40 markets surveyed, cash transactions accounted for over 10% in 30 markets.
So how much cash is appropriate to carry in your wallet?
Financial planners advised on the CNBC Make It program that keeping some cash on hand is worthwhile for situations like power outages, low phone battery, merchants having minimum purchase requirements, or needing spare change for transportation home, as cash can be handy in emergencies.
San Diego-based registered financial planner Christopher Rand told CNBC Make It that the amount of cash you should carry depends on your daily life. He suggested setting aside enough money to cover potential unexpected expenses such as fuel costs, meals, parking fees, and tips.
He also cautioned against carrying too much cash in your wallet to avoid sleepless nights in case of loss. “In general, $50 to $100,” he said.
New York-based certified financial planner Melissa Caro shared that she typically keeps $60 to $80 cash in her wallet, depending on her plans. “If I know I need that money, like for tips, parking fees, or some small expenses, I’ll keep some in my wallet,” she said. “A good rule of thumb is: If my phone is lost and I need to cab home, do I have enough? That’s my ‘panic point.'”
Other financial planners emphasized the importance of cash when technological systems fail entirely. Leslie Beck, a registered financial planner from New Jersey, recommended keeping at least $50 in your wallet for power outages and emergencies. “During Hurricane Sandy hitting New York City, ATMs were down, networks were down in many places, and cash was king,” she said.
California-based registered financial planner Tipiwa Walker advised against carrying a large amount of cash in your wallet, as it increases the risk of losing it. He noted that unlike credit cards, cash provides no protection.
In summary, financial experts suggest that even if cash is rarely used, carrying at least $50 in cash is a smart backup plan for tips, small expenses, or technical malfunctions.