Emergency Cash: How Much to Keep at Home?

In the event of a national emergency, having a stash of cash at home can be a prudent move. However, determining the ideal amount to keep on hand is a decision that requires careful consideration. A recent survey by GOBankingRates found that the majority of Americans (70%) keep $500 or less at home. The survey also revealed that 14% keep between $500 and $1,000, 7% keep between $1,000 and $2,000, 4% keep between $2,000 and $3,000, and 5% keep more than $3,000 at home. Financial experts offer varying suggestions on the amount of cash to keep at home, with recommendations ranging from $100 to $10,000.

Financial experts emphasize the importance of keeping cash at home for immediate expenses in case of a national emergency. This could be essential for accessing necessities such as food, gasoline, and medication when other forms of payment may not be viable. Danielle Miura, a Certified Financial Planner and owner of Spark Financials, cautions against holding emergency funds at home, highlighting the potential risks involved. However, Yasmin Purnell, founder of The Wallet Moth, suggests that having a small amount of cash readily available can provide a sense of security during unexpected events.

While keeping cash at home for emergencies is advisable, experts caution against hoarding large amounts of liquid cash due to potential security risks. Jesse Cramer, an associate relationship manager at Cobblestone Capital Advisors, asserts that banks are a much safer option for storing money. To mitigate the risks associated with keeping cash at home, experts recommend the use of fireproof and waterproof safes that are securely bolted down. Matthew Dailly, managing director at Tiger Financial, advises individuals to periodically deposit and replace the cash to prevent the bills from becoming too old and worn.

It’s important for individuals to understand that panic-driven cash hoarding can work against them, as standard FDIC insurance protects a significant amount in case of a bank failure. Matthew Dailly highlights that the standard FDIC insurance is $250,000 per depositor per insured bank, for each account. This provides a safety net for individuals who are concerned about the security of their funds. Moreover, it’s crucial to recognize that money kept at home loses value over time due to inflation. Therefore, while keeping a reasonable amount of cash for emergencies is advisable, it’s equally important to consider the impact of inflation on the purchasing power of that cash.

The information provided is for general informational purposes only and should not be considered as financial advice.