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After the most recent economic recession and financial crisis, some Americans lost trust in banks and resorted to keeping cash at home in large quantities. While this may sound like a reasonable way to take control of your own finances, it is actually a very risky move.
These are the major risks of keeping cash at home and why it’s best to store your personal and business cash in a bank. We’ll also offer advice on how much cash to keep at home and why that amount can be useful.
Although interest rates aren’t as high as they once were, there are still significant financial benefits to keeping money in a bank. After all, every little bit of interest earned helps in the long run!
One of the biggest risks that individuals and business owners run by keeping cash at home is theft. Homeowner and renters’ insurance plans don’t typically have high limits for protecting the theft of cash, so you may only be able to recollect a couple hundred dollars of whatever emergency cash you had stashed away.
Another major risk of this habit is natural disasters, such as fires, floods, and pest infestations. Storms and unforeseen situations can come up with no warning at all and destroy the cash that you have stored away at home. As with theft, insurance policies may not fully cover the loss of cash due to natural disasters.
Many people have financial questions like “How much cash can you keep at home legally?” and “How much money can you have in a bank account?” Well, there is no law that limits the amount of cash you can have at home, but there’s a standard $250,000 insurance limit per depositor for checking accounts at banks insured by the National Credit Union Administration or Federal Deposit Insurance Corp. Therefore, you may want to open up accounts at multiple banks to diversify your finances.
But as far as keeping cash at home, we have some recommendations in regards to how much to stash away for emergencies. This is a financial safety net just in case an unexpected expense comes up or if you aren’t able to use your credit cards for some reason. As a general rule, around $1,000 is a good amount to have in the house in case a national emergency is declared or the banks are not operating as usual.
This is another good question, and no, “under the mattress” is not the best answer. Invest in a heavy-duty cast iron or steel money safe that can be bolted to the floor in your home. This is a safe way to secure your $1,000 of emergency cash. However, you can also choose to hide your cash in a discrete location that’s not easily guessable, such as an empty bottle of pills in your medicine cabinet, inside a hollowed-out book on a bookshelf, or wrapped in weatherproof material and buried in the backyard.
When transporting money between your home and the bank, we recommend using Superior Bag’s Cash in Transit Bags, which have tamper-evident and durable construction, as well as plenty of space to write the amount, date, and other important information. Whether for personal use or business purposes, these bags will help you safely transfer money to and from the bank and give you peace of mind that it is safe and protected.
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