How important is liquidity for individuals?

by Mark Ambrose Manager

When we talk about an individual’s cash flow, we need to know that cash is important for us to deal with various transactions on a day-to-day basis. However, we need to know whether having too much cash in hand is good for us or not. This is a debatable question because people often look at the issues they are currently suffering from and accordingly decide whether they should have enough cash in hand or not. While we’re not trying to start a debate here, we’d like to put forward our views and let you decide whether you should have a considerable amount of cash in hand or keep the same in your bank account.

Unnecessary expenses

We need to realize that when we have an extra amount of cash in hand, we often end up making the mistake of spending act four things that me or me not be necessary for us at the moment. This is true not only for people at an individual level but also at the corporate level. For example, if you have a considerable amount of liquid money in your hand, you will consider using it for options like shifting from renting IPV6 to lease IPV6. This is not really the most important thing for a company because either way you can improve your chances of exploring various opportunities or keep here expenses under control. Many people and die making such unnecessary expenses, and they do not mind it in the short run. However, you should know that it would have an impact on you in the long run.

It forces as to get out of the habit of savings

You need to understand that with an excessive amount of liquid money in your hand, you are bound to spend it as noted above. When this happens, you will stop yourself from taking certain decisions related to savings. Savings are important for us, and it is not only important for us in the short run but also in the long run. If you do not get in the habit of savings today, you will make it difficult for yourself to save money later on. Also, there is a need for you to understand that when you stop saving money, you will threaten your survival in this competitive world. If you do not want this to happen, it is important that you understand the amount of money that is required for you for specific transactions and accordingly save the remaining amount. Creating an emergency fund is even advisable in this case.

It can have a negative impact on your credit score

You might not have realized for using cash more often will have a negative impact on your credit score because your credit score will not move up. An individual's credit score improve only when they meet more authentic transactions with the help of credit cards, and so it is advisable to opt for more authentic modes of the transaction for most of your purchases. It is also important to understand that there is no real need for you to use cash every now and then. It will not make things easy for you in any way. So, if you want to be sure that your credit score does not have a negative impact, you should cut down on your cash related transactions.

It will restrict us from living our dreams

When we keep a considerable amount of our savings in cash, we spend more on our short-term needs. When we make this mistake, we make it difficult for ourselves to achieve our long-term goals and live our dream. For example, if you long term goal is to have a house in your name, you might not realize that the same amount that can be saved for your dream house is being used for unsatisfactory expenses such as smart Gadgets and similar means that will make you happy in the short run but later on it will turn out to be problematic for you.