Unexpected expenses may come up at any time, whether it’s a medical bill or an emergency car repair. That’s why many people prefer having cash at home. But what about keeping large amounts of cash at home? In this guide, we’ll learn why people keep cash home, is it legal, is it safe, and what are the tips to do this safely?
Why Would You Want to Keep Cash at Home?
There are many reasons you would want to keep cash at home.
- Access to Immediate Cash – Natural disasters and other unexpected expenses require immediate access to cash. Keeping funds at home means you’ll have the money you need to cover basic necessities.
- Threats to Financial System – Today’s financial system is connected to the internet and the electrical grid. Natural disasters, structural breakdown, or even a terrorist attack may cause a meltdown that could prevent you from accessing your money.
- Negative Interest Rates – Some people fear negative interest rates. So, they would rather keep their money at home than pay the bank to keep their money when this happens.
- Bank Failures – During the 1930s, 9,000 banks failed. Many people fear that this might happen again, so they would rather keep their cash at home.
- Privacy Issues – Some individuals are concerned about their privacy, so they keep their credit card purchases to a minimum and use cash instead.
What are the Dangers of Keeping Too Much Cash at Home?
Here are some reasons keeping too much cash at home is not a good idea:
- Can Be Destroyed – Cash is tangible and can be destroyed by natural or man-made disasters, such as fire.
- Can Be Stolen – Thieves may break into your house and steal your money. What’s even worse is when people close to you rob you of your hard-earned cash.
- Not Covered By Homeowners or Renters Insurance – A homeowners or renters insurance doesn’t cover cash. Even if it did, you may find it difficult to prove exactly how much money you kept at home. And even if you get a reimbursement, there’s a chance that you’ll only get a few hundred dollars, far from the actual amount that you’ve kept at home.
- No FDIC Insurance – If you keep your money in a bank, you may be eligible for up to $250,000 worth of insurance coverage from the Federal Deposit Insurance Corporation (FDIC) if your money gets lost. You won’t get this type of coverage if you keep your money at home.
- Limited Cash Movements – If you’ve been hiding large amounts of cash at home, you may find it difficult to move the entire amount without alerting the IRS. For instance, depositing $10,000 into a bank will require the latter to report it to the IRS. If the bank detects unusual patterns of cash deposits, you’ll eventually be required to explain yourself to the IRS.
- Earns No Interest – Your money won’t earn interest if you keep it at home. Over time, your money will decrease in value. The interest when you save your money in a bank may not seem a lot. But it’s better and safer to have your funds safely tucked away in a bank that’s insured by the FDIC.
Is it Illegal to Keep Large Amounts of Cash at Home?
It’s not illegal to keep plenty of cash at home. There’s no limit as to the amount you can keep at home. However, the police may consider this unusual and may think that you’re doing some suspicious activities. You may have to explain yourself in case the authorities ask you about it.
How Much Cash Can You Have at Home?
So, how much can you have at home? Given that cash is vulnerable to inflation and theft, it’s suggested to keep cash that amounts to at least two weeks or up to a month’s worth of living expenses. This will help you get through for a few weeks in case you can’t access your bank for some reason or if an emergency comes up.
Where Should You Not Keep Cash at Home?
Burglars know the places where homeowners keep their money stash. So, if you decide to keep a few hundred dollars at home, make sure to store it in places that are out of sight and not easily reachable.
Don’t Keep Your Money in These Spots:
- Under the mattress
- In the attic (it’s one of the places that will get scorched first in case of fire)
- Inside the walls (you’d have to tear the wall apart if you need to get your money)
- Behind picture frames
- Inside books
- In the fridge
You should not only hide your money well but you should also avoid keeping your money in a single spot at home. You’ll lose all your cash if the thief finds your secret spot. Disperse your cash in different, hidden parts of your home.
Where Should You Keep Your Cash at Home?
You should choose a unique yet accessible hiding spot for your cash at home. You don’t want the thief to easily figure out where you kept your cash. Just make sure to remember where you put it.
Some non-obvious places to hide your money include:
- Envelopes taped to the bottom of your drawer
- Empty medicine bottles
- Watertight bag or container placed at the back of the toilet
- In the crawl space
- Inside a fake vent or outlet
- Inside a double zip lock bag buried in a hole in your yard
- Hidden fireproof safe
How to Keep Money Safe at Home?
1. Find a Safe Location
You need to find the perfect and safe storage location where you can keep your cash for a long time. One of the best options when keeping your valuables is to place them in a waterproof and fireproof safe. If you want to add another layer of protection, you can place the cash inside fireproof bags before inserting them into the safe.
Don’t put them in the attic because it’s the first place that will burn up in case of fire. You should also avoid putting them in spots that are known as the common hiding places like behind picture frames or under mattresses.
2. Tell Someone You Trust About The Cash
You need to tell someone you trust about where you hid the cash. In case something happens to you, someone knows where to find the money. But you need to be mindful of who you share this crucial information with.
3. Don’t Keep Your Money in One Place
It’s not only important to keep your money hidden well but you should also make sure that they are dispersed in different parts of your home. Because if you don’t and the burglar finds your secret spot, then you can say goodbye to all your money. But if you hide them in different non-obvious areas, one spot may be discovered but it’s highly unlikely for them to look in other places once they already have the money.
Alternatives To Keeping Cash At Home
1. High-Yield Savings Account
If you want to grow your savings while keeping it safe and getting access to it easily, put it in a bank. But instead of putting it on a traditional checking account, which only offers an average of 0.04% annual percentage yield (APY), choose a high yield savings account and earn as much as 1% APY. It’s one of the best options if you’re looking to build your emergency fund, or perhaps save for a home repair or vacation.
Live Oak Bank, Vio Bank, and Alliant Credit Union have the best high-yield online savings accounts.
2. Money Market Account
If you would like a safe place where you can store your extra cash and enjoy a higher yield than what’s offered by a traditional account, then a money market account is a perfect option. It offers higher interest, easy access to your cash, and protection as long as your chosen bank is federally insured.
BrioDirect, Ally Bank, and First Internet Bank offer some of the best interest rates.
3. Certificate of Deposit
A certificate of deposit allows you to lock up your cash for a specific duration. It protects your money from falling interest rates because it lets you lock your deposit in at a fixed rate. However, you need to pay a penalty if you decide to withdraw your money earlier than the set term.
4. Cryptocurrency
Cryptocurrency is an alternative investment option that’s growing in popularity these days. Bitcoin is the most common one but there are other options in the market. Cryptocurrencies are digital assets that are used as investments and to make purchases online. You exchange your real money for tokens or coins of a certain cryptocurrency. This investment option can be profitable, have high liquidity, simple, and your money is yours alone.
Conclusion
Even in today’s modern times when almost everything is tied up to the internet and the electric grid, it still makes sense to keep some cash at home. A few hundred dollars to help you survive an emergency is enough. But anything more than that could mean you’re exposing your cash to various risks, such as theft and inflation. It’s better to consider other places where you can keep your cash. If you prefer to keep your cash home, then make sure to find ways to keep it safe and protected from various vulnerabilities. Just having cash on hand saved for an emergency puts you a step ahead. If you didn't have that, then you would have to resort to a credit card, title loan or personal loan for any emergency funds. Is it illegal to keep cash at home? The answer is no. But you may look suspicious if the authorities find out that you’re keeping a large amount of cash on your property.
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
