As part of our preparation for Tropical Storm Hanna we kept some cash on hand in our emergency kit. Hanna turned out to be more beneficial for us for the rainfall but it could have been much worse.
Stashing cash in the mattress as a primary means of saving for retirement is a poor idea for a number of reasons:
- Cash lose purchasing power thanks to the thief of inflation.
- Cash burns if the mattress burns.
- Cash get stolen from people's homes and is pretty easily spent unless all of the serial numbers are tracked.
- Cash is uncomfortable to sleep on.
Bus seriously … having all of your assets in things besides cold hard cash can leave you in a bind at times, though. In the event of an extended power outage, ATMs go down. Credit cards don't work most places. And the grocery store stopped taking bottle caps as payment years ago. Here are some good reasons to have some cash around:
- Cash is accepted every place my Chase PerfectCardâ„¢ MasterCard® isn't.
- Cash speaks more loudly than check or credit.
- Cash will let you buy things when the power is out.
- Cash will let you buy things when people stop trusting banks.
- Cash pegs you as a serious buyer who knows how to handle money.
How much cash should you have? That depends on a number of things:
- How far into an emergency or crisis you want to prepare
- How much in other assets you have
- How well you can afford the cost of holding currency
- How well you can guard the cash
Holding cash isn't free. There are costs to holding cash. Interest is forfeited. It costs to store it in something more secure than a mattress. Having cash on hand might be a little uncomfortable. But these costs buy liquidity. Aside from a total collapse of the US Dollar, cash gives you the most flexibility to buy what you need.
Credit cards, debit cards, PayPal, and checks work most of the time, but not in an emergency. You need cash in an emergency.
With hurricane passing by, I should really consider having some cash in our emergency kit. Thanks for the post!
Agree 100%. I have stored a roll of $500 in my safe for years now "just in case" (i actually had 5 $100 bills but realized that might not work all that well, so i kept a few and then got 20's, 5's, and 1's).
so even if our house burns, that fire-proof safe will still protect it 😉 although, i suppose if i'm in a rush to get OUT of the house due to this fire, i might not have the 15 secs to spare to dial the combo…
Studies have shown that with cash you spend less at the grocery store, for example. It is just easier to spend more if it is plastic, than if you have to use cash.
A lot of times I save cash in my room for part of a future wish list purchase. For some reason seeing money grow into a wad over time is more motivation to save smart and slowly put more towards my goal. Not only that when I look at my bank accounts I don't have to worry about mentally subtracting that for my future purchase and know everything in my account can go towards savings and bills.
Craig
http://www.budgetpulse.com
In our home, as a general rule, we keep 50% of our monthly salary as "disposable-cash" just to ensure we have something to use in case we need it badly.
You can also make spending cash more fun with Where's George?. I now spend cash a lot more because of my fun with the service.
(I'm not affiliated in any way, but I will warn you that it can be addictive!)
I do agree it's important to keep some cash, but I think it's presumptuous to assume cash will do anything for you in a true emergency other than burn up or get wet and be useless. In an emergency: you don't KNOW what will help – there is a difference between preparation and planning. I think it's still a good idea to keep almost ALL of your money in high-interest accounts (for instance, the bank that I work for is giving 3.5% on their savings account: http://shorebankdirect.sbk.com/) – because that extra money you make may end up doing more for you in an emergency than whatever is stored in your mattress.
yea, we started stashing some cash in our safe after Katrina hit a few years ago… New Orleans had a little bit of the "wild west" going on for a few days and it is better to be prepared…
Another way to save money is to also visit bargains sites like the one i included with my name. This site isn't mine but I thought i would throw it some props as i use it all the time.
A hurricane or an ice storm can shut everything down for a few days or weeks. I concerned that bank failures and panic may shut everything down for months. So, how much cash if enough?