Why Cash is King

I often borrow a phrase  “Big Hat No Cattle” from a book called The Millionaire Next Door and it’s

That means you live an affluent lifestyle, but have very little money saved compared to what you’ve earned.

I would like to suggest it starts with living below your means and stockpiling cash as the foundation of your financial pyramid.

“Peace of mind” is what I try hardest to provide my clients. While everybody has a different set of circumstances I find that if they do not have a sufficient cash reserves balance they do not have real peace of mind.

The amount of cash or liquid savings you have on hand tells a lot about a person or couple.  For some people, anything under $100,000 in a savings account is too little. On the other hand, reading that some people have that much in liquid savings would absolutely shock to many.

What’s more shocking: People with $100,000 in liquid savings or a W50 year old couple with less than $5,000 in the bank?

Obviously, the couple with $100,000 is probably sleeping much better at night and not worried about paying for the next unexpected household expense.

It should come as no surprise that the couple with so little in the bank is probably running up their credit cards every month. I see this all the time. People have a propensity to spend money up to the amount they can afford to pay off.  When people proudly tell me they have no credit card debt (or that they pay with a debit card) I do not get too excited. I know that in most cases, those credit card bills (that they pay off every month) are keeping them from saving.

The solution: Set up an automatic saving contribution to

a separate institution (away from your current bank) and have $1,000 or more taken out of your checking account and deposited into this new account.

This can work because:

1. You may not spend as much on your credit card if you have that much less in your checking account to pay it off

2. The money is kept at a separate location so you can’t easily get at it.

Memorial Day is right around the corned and after that holiday many people in this are focus on getting the most out of the warm summer months and don’t want to think about their finances.


The economy is looking up, Consumer Confidence is at record highs and lie is good. Plan to have more to show in your Net Worth a year from now by saving more starting next month.

There are many places to save:

savings account/emergency fund

College 529

401k increase

Taxable brokerage account

Feel free to contact me if you need figuring out where or how to do this.

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