Should You Keep Cash at Home? - Quorum Federal Credit Union (2024)

(Hint: it is not a recommended practice during a volatile market, or at any other time.)

Should You Keep Cash at Home? - Quorum Federal Credit Union (1)

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While volatile financial times (inflation, recessions, and fluctuations in supply and demand) may cause some to feel as though the best place to store their money is under the mattress: it is not a recommended practice now, or at any other time. Here’s all your questions on handling cash during times of market instability, answered.

Why is it a bad idea to keep cash at home?

While it’s perfectly OK to keep some cash at home, storing a large amount of funds in your house has two significant disadvantages:

  • The money can be lost or stolen.Hiding cash under the mattress, behind a picture frame or anywhere in your house always carries the risk of it being misplaced, damaged or stolen. As careful as you may be, circ*mstances beyond your control may cause you to lose that money. For example, a dishonest worker in your home may find the cash and steal it, household pests might chew on the bills and render them unusable, or your cash-strapped teen might decide the money is there to pay for their own entertainment expenses. Unfortunately, there is no way to trace or reclaim lost or stolen cash.
  • The money isn’t growing.When cash doesn’t grow, it loses some of its value. This is especially true during times of rapid inflation: In June of 2022, the inflation rate soared to 9.1%. That meant that if you kept $1,000 at home for the next year and inflation remained at this rate throughout that time, your cash would be worth only $916.50 in one year’s time. Of course, if inflation rates increase, the loss would increase as well.

Where is the best place to keep cash?

In times of inflation, or market volatility, and anytime at all, it’s best to keep the money you don’t need for day-to-day expenses in a place where it can grow. This way, the growth will serve as a hedge against inflation. When inflation is lower, your funds can grow generously, especially if you keep the money in a savings vehicle for an extended period of time. Here are some places you may want to keep your cash at this time:

  • Savings accounts.A high-yield savings account offers a safe and secure place to keep extra funds. When you open a savings account at a federal financial institution, there’s no risk of your money being lost or stolen. [Quorum for instance, is federally insured up to $250,000 by the National Credit Union Administration].
  • Real estate.The real estate market has experienced an explosion since the coronavirus pandemic and can be a great hedge against inflation for the savvy investor. Before going this route, though, make sure you have enough cash on hand to manage your property and cover any relevant expenses, such as property taxes, repairs and more. If you’re hesitant to invest in a physical property now, consider owning publicly traded securities instead, or a real estate investment trust (REIT). An REIT is a company that owns, operates or finances income-generating real estate for investors.
  • Precious metals.Precious metals, like gold, silver and platinum, have proven to hold their value even in times of inflation and a volatile stock market.
  • Term Accounts.A term account (also known as a share certificate, and similar to a bank’s CD, or certificate of deposit) is a savings account that isfederallyinsured and has a fixed dividend rate and a fixed date of maturity. The dividend rates of these accounts tend to be higher than those on savings accounts, and there is generally no monthly fee to keep the certificate open. The fixed dividend rate will remain unaffected by the national interest rate, which can fluctuate tremendously during times of high inflation.
  • I-Bonds: These bonds offer investors a fixed rate and variable inflation rate, designed to offer a guaranteed return and added protection against inflation. They can be purchased direct from the U.S. Treasury. As an added benefit, this investment is exempt from state and local taxes (interest is subject to Federal taxes), which provides extra incentive for investors.
  • U.S. Treasury bills:Treasury bills (or “T-bills”) are sold at a discount of the face value; you receive your money back on the specified maturity date. For example, you could purchase a $5,000 T-bill for $4,800, and at the maturity date, you would earn $200 from your investment. Like I-Bonds, this investment is exempt from state and local taxes, and can be purchased direct from theU.S. Treasury.
  • Whole life insurance:Life insurance is already a fundamental component of your financial planning, and some types of life insurance can provide an added savings element. Whole life insurance contracts, for instance, will provide cash value to the insured every month they make a premium payment.

Market volatility doesn’t mean it’s a good idea to hoard your cash at home. Follow the tips outlined above to find the perfect place to park your cash.

Banking NEW Rate: Earn 4.25% APY* with HighQ. Get more out of your money with HighQ Savings—a liquid, online savings account that lets you earn a top-of-market rate with no minimum balance requirements. Learn More

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What Are Series I Bonds?How Treasury savings bonds fit into a balanced, diversified portfolio.Read the article Term Accounts: What Are They and Are They Right for You?If you're familiar with CDs, you're familiar with term accounts!Read the article 10 Big Life Changes that Can Grow Your Wealth BIG Time(Hint: Your daily coffee run or avocado toast cravings aren't killing your financial dreams.)Read the article

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Should You Keep Cash at Home? - Quorum Federal Credit Union (2024)

FAQs

Should you keep a stash of cash at home? ›

Key takeaways. Reasons people keep cash at home include emergency preparedness, financial privacy concerns and mistrust of banks. It's a good idea to keep enough cash at home to cover two months' worth of basic necessities, some experts recommend.

Should I keep all my money with credit union? ›

Expect lower interest rates and bigger returns with a Credit Union. Don't believe us? Take a look at our interest rates and see for yourself! Your money is safer in a Credit Unions hands because all accounts are federally insured up to $250,000 and backed by the U.S. government.

How much cash should you keep at home? ›

In addition to keeping funds in a bank account, you should also keep between $100 and $300 cash in your wallet and about $1,000 in a safe at home for unexpected expenses. Everything starts with your budget. If you don't budget correctly, you don't know how much you need to keep in your bank account.

What are the risks of keeping your money at home? ›

Why is it a bad idea to keep cash at home?
  • The money can be lost or stolen. Hiding cash under the mattress, behind a picture frame or anywhere in your house always carries the risk of it being misplaced, damaged or stolen. ...
  • The money isn't growing. When cash doesn't grow, it loses some of its value.

What is the safest way to stash cash? ›

Here are the Top 10 secret hiding places for money we've found:
  1. The Tank. There's plenty of room in the toilet's water tank for a jar or some other watertight container stuffed with cash or jewelry. ...
  2. The Freezer. ...
  3. The Pantry. ...
  4. The Bookshelves. ...
  5. Under the Floorboards. ...
  6. Old Suitcases. ...
  7. Closets. ...
  8. Bureaus.

Should you keep cash at home or in bank? ›

Financial advisors recommend keeping physical cash at home in the event of an emergency or natural disaster.

Are credit unions safer than banks during a recession? ›

bank in a recession, the credit union is likely to fare a little better. Both can be hit hard by tough economic conditions, but credit unions were statistically less likely to fail during the Great Recession. But no matter which you go with, you shouldn't worry about losing money.

Are federal credit unions safer than banks? ›

Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.

What are some negatives of a credit union? ›

Cons of credit unions
  • Membership required. Credit unions require their customers to be members. ...
  • Not the best rates. ...
  • Limited accessibility. ...
  • May offer fewer products and services.
Aug 24, 2023

What's the best way to store cash at home? ›

That being said, the following detailed tips are worthwhile considerations for those who want to best protect their at-home cash stash:
  1. Select a Secure Location. ...
  2. Use Tamper-Evident Bags. ...
  3. Be Discreet with Your Storage. ...
  4. Place Cash in a Liberty Cool Pocket. ...
  5. Use a Dehumidifier. ...
  6. Place Cash in a Waterproof Container.
Sep 19, 2023

How much is too much in savings? ›

So, regardless of any other factors, you generally shouldn't keep more than $250,000 in any insured deposit account. After all, if you have money in the account that's over this limit, it's typically uninsured. Take advantage of what a high-yield savings account can offer you now.

Where is the safest place to store cash? ›

Here are some low-risk options.
  • Checking accounts. If you put your savings in a checking account, you'll be able to get to it easily. ...
  • Savings accounts. ...
  • Money market accounts. ...
  • Certificates of deposit. ...
  • Fixed rate annuities. ...
  • Series I and EE savings bonds. ...
  • Treasury securities. ...
  • Municipal bonds.
Oct 18, 2023

Should I take my cash out of the bank? ›

In short, if you have less than $250,000 in your account at an FDIC-insured US bank, then you almost certainly have nothing to worry about. Each deposit account owner will be insured up to $250,000 — so, for example, if you have a joint account with your spouse, your money will be insured up to $500,000.

Why is it better to keep your money in a bank rather than at home in your piggy bank? ›

A savings account is a very safe way of storing money. Banking regulation protects your deposits in a much more effective way than your alarm system protects your valuables from robbery or home jacking.

What to do if you have a lot of cash? ›

What to do with extra cash: Smart things to do with money
  1. Pay off high-interest debt with extra cash. ...
  2. Put extra cash into your emergency fund. ...
  3. Increase your investment contributions with extra cash. ...
  4. Invest extra cash in yourself. ...
  5. Consider the timing when putting extra cash to work.

How to safely store cash at home? ›

That being said, the following detailed tips are worthwhile considerations for those who want to best protect their at-home cash stash:
  1. Select a Secure Location. ...
  2. Use Tamper-Evident Bags. ...
  3. Be Discreet with Your Storage. ...
  4. Place Cash in a Liberty Cool Pocket. ...
  5. Use a Dehumidifier. ...
  6. Place Cash in a Waterproof Container.
Sep 19, 2023

Where should you keep large amounts of cash? ›

How to Protect Large Deposits over $250,000
  • Open Accounts at Multiple Banks. ...
  • Open Accounts with Different Owners. ...
  • Open Accounts with Trust/POD [pay-on-death] Designations. ...
  • Open a CD Account, or Money Market Account, with a bank that offers IntraFi (formerly CDARs) services.
Mar 17, 2023

Where can I stash cash in my house? ›

Tips for Hiding Money in Your House
  • Choose Hiding Places Out of Plain Sight. ...
  • Hide Your Money in More Than One Place. ...
  • Traditional Money Safe. ...
  • Fake Electric Outlet. ...
  • Under a Mattress. ...
  • Filing Cabinet. ...
  • Bottom of Dresser Drawer. ...
  • Plastic Baggie Inside Freezer.
Jun 12, 2022

How much should a 30 year old have saved? ›

If you're looking for a ballpark figure, Taylor Kovar, certified financial planner and CEO of Kovar Wealth Management says, “By age 30, a good rule of thumb is to aim to have saved the equivalent of your annual salary. Let's say you're earning $50,000 a year. By 30, it would be beneficial to have $50,000 saved.

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