Wise Bread’s article on travel and money includes a nice trick for protecting your cash when travelling. It boils down to stashing your money in several places, so if your wallet is lost or stolen, you still have a small emergency fund.
Carrying all your cash in one place (usually a wallet) puts you at the biggest risk of losing the whole enchilada if somebody lifts (or if you lose) your wallet. In addition, when you whip out your wallet to pay for something and are sifting through large amounts of money, you will immediately become a formidable target for theft.
So carry your cash in a few different places. Put the day’s spending money in your wallet (this can also be an effective budgeting technique), and then stash some cash in a few other places which you don’t access in public; maybe a money belt, lock some in your luggage (an unlikely place like with your dirty clothes is good), and/or put a few emergency bills in your shoe (underneath the insole is great).
I tend to carry emergency cash in a special pocket underneath my clothing, so if I lose everything, I still have some cash to get me out of whatever bind I may have found myself in.