Is it a good idea to save money in cash?

Some people want to accumulate cash because it makes them feel more secure than risking their money in the market. Cash is generally considered a completely safe place to store money. Natural disasters, such as Hurricane Katrina and recent tsunamis, have motivated people to keep some money at home. Hoarding your cash and letting your savings balance get too high can cause you to lose money.

You should save when you have income but have little or no cash available. Set a goal to create a cash savings balance that can cover six months of your living expenses. This protects you against unexpected financial emergencies, such as a car accident or job loss.