6 Reasons You Should Stop Hiding Cash at Home

Man hiding cash under a mattress
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Should you stash some cash in a hiding place around your house?

It can seem like a fun, creative way to save your money — $100 bills stuffed in the bottom of a cookie jar, $50 bills stuck between the pages of a book, even more money buried in the backyard. But it is actually a dumb and unsafe way to hold on to your money.

Here are several reasons why hiding cash around the house is a bad idea.

1. You are missing out on ‘free’ money

Putting money in an interest-paying bank account enables it to grow. By keeping your savings in cash at home, you are missing out on interest — free money, basically.

Interest rates on savings accounts aren’t great right now, but you can still earn a little extra if you shop around. So, stop by our Solutions Center and compare rates on savings accounts.

2. The money is not FDIC-insured

When you deposit money at a bank that is backed by the Federal Deposit Insurance Corp., your money is insured by the FDIC. This independent federal agency insures deposits for at least $250,000.

You have none of that protection if your money is stuffed in a mattress.

To find out whether a particular institution is FDIC-insured, use the agency’s BankFind tool.

3. You could lose the money

You might not hang on to your hidden money for as long as you’d think. You could lose it to fire or theft, or you could forget where you hid it.

Jason Speciner, a certified financial planner at Financial Planning Fort Collins in Fort Collins, Colorado, advises keeping on hand only enough cash to cover about one week’s worth of living expenses — and storing it in a fire-proof safe.

“This is especially important if you live in an area that is prone to natural disaster like an earthquake or hurricane, which may displace you and/or knock out infrastructure,” Speciner tells Money Talks News.

4. Cash might not be covered by insurance

Homeowners and renters insurance policies generally offer little protection for cash hidden around the house, says AnnaMarie Mock, a certified financial planner at the Highland Financial Advisors in Wayne, New Jersey.

She tells Money Talks News:

“Renters and homeowners insurance will typically insure a very small amount of cash in the event of it being stolen or destroyed. The limits will vary based on policies, but it can be as low as a couple hundred dollars.”

5. You are losing out to inflation

By not putting your cash in a bank account where it can earn interest, you will be harder hit by inflation. In fact, your cash is certain to lose buying power over time.

Say you hid $1,000 around your house a decade ago, in January 2011. According to the Bureau of Labor Statistics’ inflation calculator, that grand would have the same amount of buying power as $1,187.81 in January 2021.

In other words, your hidden cash can’t buy as much today as it could when you hid it. But putting money in a savings account that earns interest will help counteract this costly effect of inflation.

6. A loved one might end up having to search for hidden money

Family and friends will have enough to worry about when you die. Don’t add to their stress by leaving money stashed around your home — forcing them to hunt for it.

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