Dave Says: Keep it small, and budget for it.

Dear Dave,

I’m trying very hard to get out of debt. I have my beginner emergency fund in place, and I’m living on a monthly budget. Is it okay to include a little wallet cash in my budget at this point, just in case?

-Andrew

Dear Andrew,

It’s probably not going to throw you off too much in terms of getting out of debt if you budget $20 or so, just to have some cash in your wallet. I wouldn’t recommend much more than that, though. The idea of having $50, $100, or $200 in walking around money is pretty self-defeating when you’re supposedly saving, budgeting, and working hard to get out of debt.

What really matters is the amount of pocket money you allow yourself to have.

Think of it as a safety valve. Sometimes things come up in the course of day-to-day life that are just necessary, unexpected expenses—but not emergencies. Just designate a small amount of cash for it as part of your regular, monthly budget, and stick to that amount!

—Dave