What should I do with my cash?

Jul 21
4 min read

Here’s a beautiful problem to have: a pile of cash sitting in your bank account, and you’re not sure what best to do with it.

At least 70% of the individuals and couples Carlos and I work with ask us some version of this question: “what should I do with my cash?”

It usually sounds like this:

· Which savings account should I keep my cash in?

· Or maybe I should invest it?

· Perhaps pay ahead the mortgage?

· Or use it as a down payment for a new property?

· Gift a chunk of it to a family member who needs it? Or travel?

While it’s a great problem to have, 100% of the people who ask us this also admit they are worried of making the wrong move.

I completely get it.

Whether you worked hard to save this money or received a sudden windfall (like an inheritance), you want to do the right thing, the smart thing.

But here is where most people get stuck: looking for a mathematical answer to a very human question.

People usually start by asking for the highest ROI (Return on Investment) on their cash. And while that makes logical sense, money doesn’t exist just to make more money.

It exists to buy choices, peace of mind, and time.

If you want to move past the analysis-paralysis and give your cash a clear purpose, here is the 4-step framework Carlos and I use during coaching.

Step #1: Where does this cash sit in your overall financial picture?

Before jumping into the mechanics of savings rates or investment platforms, let’s first zoom out:

How is your overall financial picture looking?

When we first start coaching a new client, we begin by understanding where they are on the Ladder of Personal Finance:

1. Are you managing your expenses consistently?

2. Do you have an emergency fund?

3. Are you taking care of high-interest debt?

4. Are you investing to close your retirement gap?

5. Are you planning ahead for your other major financial goals?

By doing this assessment first, you’re better informed to give your cash the purpose it needs to have.

If you're curious where you are on the Ladder of Personal Finance, email us for a copy, we will send it to you.

Step #2: Buy your financial security first

Your cash has three non-negotiable jobs to do before it can do anything else:

The emergency fund: This isn't just money for a sudden home repair. This is the boundary line between you and an event that can derail your financial health and wealth building progress.
Paying down high-interest debt: We’re not talking here about a mortgage with a 3-4% interest rate. Rather about credit cards or personal loans that have crippling interest rates, above 8%.
Investing to close the retirement gap: Your future self is relying on you. State and employer pensions are rarely enough to provide for your desired lifestyle at retirement. For the vast majority of people, investing privately to fill that gap is a necessity, not an option.

If you’re not yet taking care of these fundamental pillars of your finances, then this is where you start giving purpose to your cash.

Step #3: Define your Purpose Funds (what else do you want to 'buy')

If your emergency fund is full or accumulating, you don’t have or are paying down high-interest debt, and you’re investing regularly and consistently for your retirement, congratulations!

You’re ahead on the Ladder of Personal Finance, and can now give your remaining cash a specific, guilt-free purpose.

Ask yourself now:

Beyond making it grow, what do I actually want my money to do for me?

When we dig into this question during coaching sessions, the answers are rarely about ROI. People will say things like:

· "I want to make our apartment feel like home." (Comfort)

· "I want to choose how I work and spend my time." (Freedom)

· "I want my kids to have a head start without debt burden." (Generosity)

· "I want to discover new cultures, taste delicious food, expand my hobbies." (Experience)

What is the first word that pops into your head when you think about your cash pile? Is it safety? Freedom? Adventure?

Notice it. That is your core driver for accumulating cash, beyond basic financial security.

Step #4: Match the timeline of your Purpose Funds with the right financial tool

Once you named your Purpose Funds (a house down payment, a big trip, a baby fund, home renovations, or an anniversary trip), match the goal to the right financial tool.

The rule here is simple: When you want to achieve your financial goal (timeline) dictates the home for the money.

Short-term goals (within 1–3 years) match with capital preservation. Do NOT risk this money in the stock market chasing returns. The smartest move here isn't getting the highest ROI, it's ensuring 100% of the cash is there when you need it. Keep it in a dedicated high-yield savings account.
Longer-term goals (5+ years out) match with capital growth. You can consider investing this cash into a highly diversified global index fund where it can outpace inflation and compound over time.

Optimize your cash for your desired life

Instead of what you should do with your cash, are you now a bit clearer on what your cash should do for you?

If not and you're still trying to assess your financial picture on the Ladder of Personal Finance, or are stuck trying to balance how to best fund all your financial goals, we can help, just let us email us or book a free Q&A call.

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