Optimal Finance Daily — Episode 3375: “Should Cash Be Part of Your Emergency Fund?”

By Honey Smith with Get Rich Slowly | Hosted by Diania Merriam
Date: December 4, 2025

Episode Overview

This episode explores a practical facet of emergency planning: whether and how much cash should be kept as part of your emergency fund. Drawing from personal anecdotes and the realities of disasters, Honey Smith (via Get Rich Slowly) and host Diania Merriam break down the pros, cons, and best storage methods for keeping physical cash on hand. The conversation goes beyond digital finance, focusing on real-world scenarios where a cash stash could make all the difference.

Key Discussion Points & Insights

1. The Reality and Psychology of Emergency Cash

• The “Wallet Fairy” Story (01:15)
  Honey recounts receiving a novelty “wallet fairy” in college, symbolizing wishful thinking about never running out of money. Despite this charm, she shares hard experiences of financial scarcity:

  “I distinctly remember crying after going to the grocery store on a couple of occasions because I didn’t know how I was going to pay my bills after buying food.” (01:37)

• These lessons prompted deeper thinking about preparedness—especially after witnessing flash floods in Phoenix.

2. Pros and Cons of Keeping Cash On Hand

Pros:

• Out of sight, out of mind (02:54)
  Physical cash kept “out of the way means you’re less likely to think about it and thus be tempted to spend it unless there’s a true emergency.”
• Peace of mind (03:53)
  Cash can’t be garnished or digitally traced, which can add a layer of financial security in certain emergencies.

Cons:

• No interest earned (03:22)
  Keeping money in cash means missing out—even on “sub 1%” savings account rates, this adds up with larger amounts.
• If lost, it’s gone (03:53)
  “If you lose the money, it gets destroyed, you’re robbed… you may have very little recourse.”
• Security risks
  The more cash at home, the higher the risk from theft, fire, or loss.

3. How Much Cash Is Enough? (04:22)

• Conventional wisdom says an emergency fund should cover “three to six months of expenses”—but few are comfortable keeping that much in physical bills.
• Consider local risks:

  “If you live in an area that’s prone to natural disasters, keeping enough cash on hand to buy food and supplies in the event that credit or debit isn’t an option… may be smart.”

• Strike a balance: Be realistic about needs but avoid paranoia.

4. Where to Keep Emergency Cash? (05:28)

• Diversion Safe at Home:
  • Inexpensive, disguised as everyday items (books, cleaning products).
  • Downside: Usually not locked—“if someone does happen upon it, the gig is up.”
• Home Safe:
  • Larger, secure, often fire/waterproof.
  • Downside: Expensive, hard to hide, takes up space.
• Safe Deposit Box:
  • Secure in banks, post offices; minimal rental fee.
  • Downside: Not instantly accessible—“depending on the circumstances… this may or may not be feasible.”
• Hidden costs:
  • Insurance, alarms, and peace of mind can add indirect costs.

5. Host’s Personal Take & Final Reflections (10:01)

• Diania notes she barely uses cash and values digital transaction records for budgeting.

  “The last time I needed cash I went to the ATM only to discover that my debit card had been expired for six months and I had no idea.”

• She highlights that digital systems may be down in disasters—physical cash can be essential for food, gas, and medicine.
• Bottom line:

  “Cash is also the most insecure asset you can have, so keeping it to a minimum in the house in case of fire or theft is a good rule of thumb. How much cash you'll need is highly personal, but I can't imagine holding more than $1,000.” (10:33)

Notable Quotes & Memorable Moments

• On past money struggles and learning:

  “If the magic were foolproof, this fool wouldn’t have learned her lesson and started digging her way out of debt, right?” — Honey Smith (01:29)

• On inflation and missed opportunities:

  “Even parking your cash in a savings account… it’s better than nothing, right?” (03:38)

• On realistic emergency cash needs:

  “It’s important to be realistic, but there’s no need to be paranoid.” (04:46)

• On practicality of cash storage:

  “When was the last time you went to the bank?” — On safe deposit boxes (06:48)

• On personal cash limits:

  “I can’t imagine holding more than $1,000.” — Diania Merriam (10:33)

Timestamps for Key Segments

• 00:00 – 01:13: Ads, show intro skipped
• 01:13 – 02:54: The “wallet fairy” story & real-life cash struggles
• 02:54 – 03:53: Pros and cons of storing cash
• 03:53 – 04:46: How much cash to keep
• 05:28 – 07:32: Where to keep cash and storage options considered
• 10:01 – 10:45: Host’s commentary, personal viewpoint, conclusion

Summary in the Podcast’s Tone

This episode spotlights the nuanced question: Should we stash cash as part of our emergency fund? Honey Smith (Get Rich Slowly) and Diania Merriam remind us that while digital banking rules our day-to-day, a little green paper can save the day when disaster strikes and the apps go dark. The message is clear—find your own comfort level, keep it manageable, and prepare for emergencies according to the real risks in your life.

As Diania puts it, don’t let paranoia drive your choices, but don’t skip cash entirely—“keeping it to a minimum in the house in case of fire or theft is a good rule of thumb.” Consider what you’d need for a few days’ supplies if the world went offline, and keep the rest earning interest in the digital world.

Your optimal financial life is about balance—this episode is your friendly nudge to be ready for anything.