Is it worth keeping cash at home?

In today’s digital world, it may seem antiquated to keep a stash of cash at home. After all, with debit cards, credit cards, Venmo, PayPal, and other electronic payment methods, do we really need actual paper money anymore? However, there are some advantages to keeping some emergency cash on hand. Here we’ll explore the pros and cons of keeping cash at home and help you decide if it’s worth it for your situation.

Table of Contents

The pros of keeping cash at home

Here are some potential benefits of keeping some cash stored securely in your home:

Access during emergencies or power outages – If the power goes out or electronic systems go down, ATMs and credit/debit cards may not work. Having cash on hand ensures you have a way to pay for necessities.
Convenience for small purchases – It can be easier to pay with cash for small, everyday purchases like a coffee, tipping, or a garage sale rather than getting out a card.
Teaching kids about money – Having some cash around can help kids learn money management skills like budgeting, saving, and responsible spending.

Avoiding fees – Using an ATM that is outside of your bank’s network or making frequent withdrawals can result in fees. Having cash on hand allows you to avoid those fees.
Privacy and security – Cash transactions don’t leave a digital trail like electronic payments do. Some may prefer the privacy of paying in cash.
Works everywhere – Cash is universally accepted. Some small businesses may not accept electronic payments.

Hedge against bank closures – Having cash at home provides a safety net in case your bank closes temporarily or your accounts are frozen.

How much cash should you keep at home?

The amount of cash you keep at home depends on your comfort level and needs. Here are some recommendations for determining a reasonable cash reserve:

1 week’s worth of essential expenses – This would cover necessities like food, gas, medication if you couldn’t access accounts.

$100-200 for small purchases and convenience
$1000 or more for emergencies like job loss or major car repair.

You’ll also want to consider how many people are in your household. The more people relying on the cash reserve, the more you may want to keep on hand. It’s generally advised not to keep more than $2,000 cash at home for fire and theft safety reasons.

Where should you keep the cash at home?

The location you store cash at home matters. You want it to be readily accessible in an emergency but also hidden and secure.

Some good places to store home cash reserves include:

A home safe – either floor or wall mounted.

Buried in a container in the backyard.
Hidden inside furniture with false backs or bottoms.
A safety deposit box.

Hidden inside books or other decoy items.

Avoid obvious locations like underwear and sock drawers, under the mattress, or on top of the refrigerator. Tell only trusted individuals the cash location.

The cons of keeping cash at home

While keeping cash at home has benefits, there are also some potential downsides to consider:

Risk of theft – Cash kept at home could be stolen by burglars or visitors/workers if poorly hidden.
Risk of accidental loss/damage – Cash can be misplaced, eaten by pets, destroyed in a fire or flood, etc.
No interest earned – Cash tucked away at home does not earn any interest like bank accounts.

Requires discipline – It takes discipline not to dip into cash reserves for unnecessary purchases.
Not insured – Cash kept at home is typically not insured like bank accounts if lost or stolen.
May encourage poor spending habits – Easy access to cash reserves could promote bad spending habits.

Security concerns – Large amounts of cash may require greater security precautions.

Tips for keeping cash securely at home

If you decide keeping some cash at home is right for your situation, here are some tips for keeping it secure:

Hide it well in creative locations around your home.

Use secure storage like safes and lock boxes.
Keep details about cash reserves private.
Store bills in smaller increments – easier to access smaller amounts as needed.

Save the majority of cash for true emergencies.
Keep detailed records of how much is stored.
Check cash reserves occasionally to ensure no theft.

Consider hiding fake bundles along with real cash to deter theft.
Invest in home security like cameras, alarms, and lights to prevent break-ins.

Alternatives to keeping physical cash at home

If you’re worried about the risks of keeping physical cash around, there are some alternatives that provide the benefits of having cash while avoiding the potential pitfalls.

Pre-paid debit cards – You fund them with cash but don’t need the actual bills at home.
Mobile payment apps – Like Venmo or PayPal for convenient electronic transfers.
Savings accounts – Provides interest and FDIC insurance.

Cashier’s checks – A check guaranteed by the bank, but not physical cash.
Money orders – Secure cash instruments that can be used like cash.
Gold/silver – Precious metals have value like cash if currencies fail.

Cryptocurrency – Digital currency usable for transactions.

Factors to consider when deciding about home cash storage

Here are some important factors to think through when deciding if keeping cash at home is right for your situation:

Your comfort level with having cash at home

If you have a history of losing cash or poor spending habits
How much cash you typically need for small purchases
The crime rate in your area

If you have secure storage locations in your home
How many trusted individuals know about your home
How much cash you can afford to have possibly stolen

Your budgeting abilities and spending discipline
How often you typically have power outages or restricted account access

Carefully weighing these factors will help determine if keeping cash reserves at home is a wise move or unnecessary risk for your situation.

Quick tips for deciding about home cash storage

Here is a quick summary of key considerations when deciding if keeping cash at home makes sense:

Only keep what you can afford to lose.
Prioritize security – safes, hiding places, light/alarm systems.

Keep cash reserves for true emergencies, not unnecessary purchases.
Have a back-up emergency plan if cash is lost or stolen.
Don’t jeopardize safety – avoid keeping too much cash on hand.

Weigh risks like theft, loss, and poor spending habits.
Consider alternatives like pre-paid cards and mobile payment apps.
Keep cash details private – only inform trusted individuals.

Conclusion

Having cash stored at home can provide comfort in emergencies and convenience for everyday purchases. However, there are certainly risks like theft or loss that require careful evaluation. Take into account your personal needs and situation to determine if the benefits outweigh the potential downsides. Utilize secure storage and spending discipline to minimize risks if you do decide to keep cash reserves at home. Alternatives like pre-paid cards can also provide ease of transactions without the same risks. With some prudent planning, cash can still play a role in a modern digital financial strategy.