When I travel, I carry the bulk of my money, my passport, travel docs, etc. in a money belt that goes under my clothing. Because my travel pants have secret pockets, I'm able to put my credit cards there for easy access.
I put about $20 (or the equivalent in whatever country I'm in) in the purse, so I can purchase small items without having to dig into the money belt. At restaurants, I excuse myself to go to the restroom and pull out the needed money.
My travel purse is made out of recycled tires. If a thief's knife can cut through that, s/he deserves whatever money is in my purse. :) The worrying aspect of my purse is the strap. It's made out of a thin, cordura like material. If I could, I'd replace it with something more useful.
Pickpockets are everywhere, including one's hometown. Fortunately, my regular purse is made out of recycled tires and has a wood bottom. Also the strap is made out of washing machine tubing.
Onebag.com has some useful information on the benefits of the money belt in comparison to other methods of carrying one's money.