It's much better to keep your funds hidden in a bank or credit union insured by the Federal Deposit Insurance Corporation, where you'll earn interest and have full protection from the FDIC. For most people, those savings take the form of an emergency fund. When thinking about your total savings, consider an emergency fund as part of the combination, says Shirley Yang, vice president of Marcus by Goldman Sachs. Ultimately, your goals will determine where you'll keep your money.
Keeping cash at home makes it easier to access, but banks offer many benefits that you can't get anywhere else. In some cases, you may have to pay a penalty if you withdraw your money before a specific time, but savings accounts allow you to earn interest on your deposits and you may sleep better at night knowing that your money is insured. You'll often hear that your first financial priority should be to create an emergency fund. And to that end, a good goal is to keep enough cash in your savings account to cover three to six months of essential expenses.
In fact, some experts say that having up to a year's worth of cash spending is a good bet.