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Finance

By Acura Labs | 23 November 2020

How Much Cash Should I Keep in the Bank?

There are several methods for making transactions, such as cash payments, credit cards, debit cards or digital money. However, the frequency of payments with digital money is definitely being used more and more from year to year. Then, is it still necessary to save a lot of money in a bank account in this digital age? Before answering, let’s take a look at the history first!

In general, how to manage finances has always evolved from primitive times to the current digital era. In ancient times, people only kept money in a box or piggy bank in the house. Then, when it entered the industrial age or modern era, people finally began to think of having a new pattern of saving money in an institution called banking.

People Want Security

In those days, one thing people wanted was how to secure the money they had put aside. When they keep money at home, the worry that it will be lost or stolen always haunts them. But when they put money in the bank, that worry goes away and turns into a sense of security.

So, the basic concept of banking is how to secure money; the more developing times, the higher the level of security. For example, at this time, any money you save in a savings account through banking will always be under the protection of the state through the Deposit Insurance Corporation. So, you don’t need to worry because your money won’t be lost even though the bank goes bankrupt.

Why is Savings Interest So Small?

In addition to providing a sense of security, saving money in the bank also has added value compared to saving money at home, because there is an interest system or ratio, in which the money we save can multiply.

Maybe you are thinking, but the interest on savings is very small, some are not even up to 1% per year? Yes, in accordance with the principle of high return high risk investment, savings in banks are the safest investment product. So, it is only natural that the interest given is also relatively small.

Ideal Amount of Savings

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Then, is it still popular in this digital era to save at a bank? The answer is yes, but in this digital age you don’t just have to save but also have to invest. So, about how much money you need to put in a bank savings? Actually, this amount is relative, depending on the risk profile of each person. However, the average amount of money that must be in the savings should be enough for 3 to 4 monthly expenses as detailed on the side.

Now, try to calculate how much your monthly expenses are. For example, your monthly expenditure is Rp. 5 million, so savings in the bank are only Rp. 15-20 million. How about more? It is better if this excess is transferred to investment instruments with higher interest rates, such as deposits or we can also use it to buy banking shares so that they are strong enough to beat inflation by 3-7% per year. Want to know how to invest and how to buy banking shares? Stay tuned!

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