As if investing isn’t already overflowing with choices on where to direct your money, you also must figure out where to hold your cash. Should you keep it in a bank account? High yield savings? Online only institution? Money market? Under the mattress?

It’s surprising how little is written or discussed about managing cash reserves. All too often the attention goes to investment possibilities and potential outcomes. What about cash? Why doesn’t it get the “love” it deserves? Maybe it’s because cash can be rather boring; it’s rarely discussed with the same enthusiasm as investing.

Making the most of your short-term cash means holding the right amount compared to your long-term investments. Here are five rules I follow so my family’s liquidity stays relevant.

1. Treat cash like cash, not an investment. Cash shouldn’t be squeezed like an orange to extract the most juice/highest rate of return possible. Don’t make the mistake of treating your cash in the same manner as your long-term investments. The job description of your investments should be to expand in price and value over the long run. In the short term, keep your cash simple so you have access without delay or restrictions regardless of the interest earned.
2. Hold cash in separate accounts, not lumped together. Like your investments, your cash should have a specific purpose. You may hold cash for emergencies, home improvements, taxes, travel, hobbies, and fun. Lumping cash into one account will give you a headache! It’s just too taxing on our brain to mentally account for all the job descriptions cash is playing in our financial house. Simplify by creating separate accounts and labeling each with intention.
3. Create a financial plumbing system for your family. Every family has different spending patterns and uses for their cash. Financial plumbing is moving the right cash to the right account for spending, savings, giving, and living. Using recurring ACH instructions allows cash to flow without friction.
4. Establish a cash reserve account where your investments live. Periodically you’ll liquidate an investment. Where will the net proceeds/cash live? Having a cash reserve at the same institution as your investments gives your cash a home. Now it’s detached from your investments, which provides better transparency and accountability.
5. Always refill your cash reservoir before it’s necessary. Nothing is more stressful than spending down your reserves without a plan to refill. Earning an income makes restocking cash easier. So does selling investments. Challenges can arise when market volatility arrives and cash has dwindled.

Consider these suggestions as you reflect on where your cash lives and how you use it. By integrating this topic with your investments better planning experiences are possible.