By Jim Wang
How much cash do you have hidden around your home?
If the answer is more than $100, then you have too much cash in your house.
We all keep a little money on hand for those rare occasions -- like
the times you need cash because the neighborhood kid offers to shovel
your driveway or mow your lawn. You want to help the enterprising young
child but don't want the hassle of driving to an ATM, so you keep some
cash around the house. But if you're hiding money in your home because
you don't feel it's safe in a bank, you're making a huge mistake.
During the recession, when everyone was panicking because banks were
failing, lots of people decided their cash was safer in their home and
out of the bank. In reality, that's not true. Here's why:
1. You aren't earning interest on your money.
The best financial reason for not leaving cash at home is that you
don't earn any interest on your savings. The interest from a bank may
not seem like a lot, especially given low interest rates, but every bit counts.
It's far better to keep your funds tucked away in an Federal Deposit Insurance Corporation-insured bank or credit union where it will earn interest and have the full protection of the FDIC.
Speaking of protection ...
2. You may not be protected if it is stolen or destroyed in the event of a robbery or fire.
Renters and homeowners insurance typically do not have high limits when it comes to protecting the loss or theft of cash within your home. You need to review your policy in order to know what your limit is, but it could be as low as $200.
This means if someone steals your hidden cash, it's most likely gone
for good. You won't be reimbursed unless you have a separate rider,
which seems silly to pay for just to keep cash in your home.
3. You might accidentally throw it out or leave it behind.
In 2006, a contractor was renovating a bathroom and found $182,000 of
Depression-era money in the walls. The moral of the story: Don't hide
money in places you won't remember.
It's very easy to forget where you hid your rainy day fund if you are
really good at hiding it. The last thing you want to do is forget where
it is or accidentally throw it out.
Even if you think you'll remember, someone else find it, or worse,
rid of it. In 2009, a woman in Tel Aviv gave her mom a new mattress and
threw away the old one. There was just one problem -- the mom had hidden
$1 million of her savings inside the old one. Now they just have sad
photos of them searching through a dump for the million-dollar mattress.
So do you really need to keep cash at home?
What's the reasoning behind keeping cash at home? Do you think
you'll need it for some future need? If you can't think of any immediate
reason -- in other words, a need within the next week or so -- then
it's not necessary to stash cash at home.
If you need the cash to pay someone for something, consider if it's
possible to give the individual a personal check or if you can pay by
credit card. Those are far safer alternatives than keeping a wad of cash
in your drawer.
However, if you really need to keep cash on hand,
put it somewhere you'll remember but thieves won't find. Do a quick
search online for some clever hiding spots -- though fair warning there
are a few repulsive options -- and then find a way to remind yourself
that you hid money there.