How Much Cash Should You Keep At Home? | Bankrate (2024)

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.
  • A locked, waterproof and fireproof safe can help protect your cash and other valuables from fire, flood or theft.

Physical cash is becoming less relevant as money management goes digital, but it’s a good idea to have a reasonable amount of cash at home in case of emergencies.

Here’s more information about how much cash you should keep at home, the risks involved and how to keep your money safe.

Why people keep cash at home

Despite the ease of depositing money in a bank account and the assurance of Federal Deposit Insurance Corp. (FDIC) protection, many people still keep a portion of their funds in physical cash. Some reasons for this include:

  • Mistrust of banks: For some, it’s less about keeping cash and more about avoiding banks. A recent survey from the FDIC found that 36 percent of unbanked individuals — those who don’t have bank accounts — don’t trust banks.
  • Privacy concerns: In a business environment threatened regularly by data breaches and hackers, consumers may want to keep some of their finances more private.
  • Emergency preparedness: There are situations in which it might not be possible to access a bank account. A hurricane could damage the electric grid, or you could simply lose your wallet and debit cards and need some cash to buy essentials.

Keep enough cash for emergency expenses

Elliot Pepper, CPA, CFP, MST, financial planner and co-founder of Maryland-based Northbrook Financial, says that “a small but reasonable amount of cash should be kept on hand at all times.”

“The need for actual cash is growing less and less relevant, so an actual savings of physical cash is primarily there to provide protection in an extremely adverse scenario,” Pepper says, adding that the scenario would likely not be a “long-term position.”

“A cash amount enough to cover the absolute bare necessities for two months might be a reasonable basis,” Pepper says. “This monthly amount would be less than the monthly amounts used to calculate a traditional emergency fund, as it’s really there to cover the bare necessities in the face of an emergency.”

Those bare necessities include a minimum housing payment, food staples, batteries, water, gasoline and basic living needs. The most recent Consumer Expenditure Survey by the Bureau of Labor Statistics reports that the average monthly cost for food and gasoline alone is slightly less than $1,000 for U.S. consumers. That could serve as a baseline for how much to keep in cash, which will vary depending on the size of your household, costs of living for your area and whether you want to include other expenses in cash savings.

However, Pepper says that it might be wise to keep those staples on hand instead of keeping cash to buy them. So, for example, rather than keeping $50 at home to fill up your gas tank, perhaps keep a reserve of gas or make sure your tank is always full.

“There is a difference between being a ‘doomsday over-preparer’ and a reasonably responsible planner,” Pepper says.

Where to safely keep cash at home

Just like any other piece of paper, cash can get lost, wet or burned. Consider buying a fireproof and waterproof safe for your home. It’s also useful for storing other valuables in your home such as jewelry and important personal documents.

The risks of keeping cash at home

Planning to stash cash in your home? Consider the drawbacks:

  • You don’t have FDIC insurance: When you deposit money in an FDIC-insured bank, you can take comfort knowing that your deposits will be protected and reimbursed up to $250,000 if the bank fails. For credit unions, insurance is provided by the National Credit Union Administration (NCUA). If, however, someone steals your cash or you lose it, it’s gone.
  • Some places won’t accept it: During the coronavirus pandemic, many merchants shifted to cashless and contactless transactions, and some continue not to accept cash to this day.
  • No earning potential: One of the major benefits of keeping cash in a bank account is that it can grow, thanks to interest earned on bank balances. If you keep your money in cash, it never grows. Your $20 is still $20 a year later, and that same $20 actually becomes less valuable due to inflation. The more money you keep in cash, the more you miss out on accruing interest.

Alternatives to keeping cash at home

Pepper says that the argument for keeping a lot of cash on hand is less compelling as digital payment technology continues to make dealing with money easier.

“From a safety perspective and administrative ease standpoint, it is so easy to transact everyday purchases electronically. Additionally, keeping savings in an FDIC-insured account provides a degree of protection that is lost when cash is just kept under the mattress,” Pepper says.

Rather than stockpile cash at home, you have a few options:

  • Open another checking account: If you already have a checking account, consider opening another account at a different bank or credit union to diversify where you keep your money. Let’s say, for example, that your primary bank is impacted by a power outage and its ATMs are offline. Your other financial institution may not be affected. You’ll want to verify that your new account doesn’t have a minimum balance requirement to avoid any fees if you’re only keeping a small amount of cash.
  • Find a high-yield savings account: The main advantage of a high-yield savings account (one that earns more interest than average) is that it can help your money grow at a higher rate and better keep up with inflation. Savings account yields are high right now, thanks to 11 Federal Reserve rate hikes that started in 2022.
  • Load funds onto a prepaid card: Rather than keeping cash in physical bills, you can load a small amount on a prepaid debit card to make sure you have cash available in an emergency. Federal law does provide protection for those funds if you have registered your prepaid card and someone steals the number. However, you have to report the issue immediately. Additionally, some prepaid cards may charge you a fee to replace a lost or stolen card.
  • Keep some cash in a PayPal account: While PayPal shouldn’t replace a bank account entirely, you can keep some money in it. The platform offers convenient payment features and the ability to send money to friends both domestically and internationally.

Bottom line

Whether to keep cash at home is a personal choice based on several factors. If you’re considering keeping more cash around the house, you’ll want to examine your reasons for wanting to do so as well as your current expenses to determine how much to have on hand.

Understanding the benefits, risks and alternatives to keeping cash at home can also help you ensure that you’re making the best decision for your circ*mstances — and that if you do choose to keep cash at home, you’re doing so as safely as possible.

—Bankrate’s Karen Bennett and René Bennett contributed to updates of this story.

How Much Cash Should You Keep At Home? | Bankrate (2024)

FAQs

How Much Cash Should You Keep At Home? | Bankrate? ›

It's a good idea to keep enough cash at home to cover two months' worth of basic necessities, some experts recommend. A locked, waterproof and fireproof safe can help protect your cash and other valuables from fire, flood or theft.

What is a reasonable amount of cash to keep at home? ›

“It [varies from] person to person, but an amount less than $1,000 is almost always preferred,” he said. “There simply isn't enough good reason to keep large amounts of liquid cash lying around the house. Banks are infinitely safer.”

Is it a good idea to store 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.

How much cash can you keep at home legally in the US? ›

While it is legal to keep as much as money as you want at home, the standard limit for cash that is covered under a standard home insurance policy is $200, according to the American Property Casualty Insurance Association.

How much cash should a family keep on hand? ›

While you're working, we recommend you set aside at least $1,000 for emergencies to start and then build up to an amount that can cover three to six months of expenses.

Is 20K in savings good? ›

While $20K may not let you quit your job, it's enough to start building financial security, whether you max out your retirement accounts, invest in fine art, or divide your cash between multiple investments.

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.

What to do with a lot of cash at home? ›

Put extra cash into your emergency fund.

The general guideline is to accumulate three to six months' worth of household expenses. Consider putting it in a high yield savings or money market account, which typically earn more interest than a traditional savings account.

How much should a 30 year old have saved? ›

Fidelity Investments recommends saving 1x your salary by 30. At the end of 2021, the average annual salary was $49,920 for 25 to 34-year-olds and $58,604 for 35 to 44-year-olds. So the average 30-year-old should have $50,000 to $60,000 saved by Fidelity's standards.

Where is the best 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

Where is the safest place to keep cash at home? ›

7 Safe Places to Keep Cash Hidden in Your Home
  1. Taped to the inside of a dresser. ...
  2. A hollowed out book. ...
  3. A fake electrical outlet box. ...
  4. A package in the freezer. ...
  5. The bottom of your flour canister. ...
  6. Inside your plumbing access door. ...
  7. In the toilet.

Can I deposit 100k cash in the bank? ›

Financial institutions are required to report large deposits of over $10,000. However, if the bank reports your cash deposits before you do, you may end up with a fine or, worse yet, have your account frozen. There are also a few other situations that can put you on the IRS's radar.

How much money can I withdraw without being flagged? ›

That said, cash withdrawals are subject to the same reporting limits as all transactions. If you withdraw $10,000 or more, federal law requires the bank to report it to the IRS in an effort to prevent money laundering and tax evasion.

How much cash does the average American family have on hand? ›

In 2022, the average American household had transaction accounts worth $41,600, while the median balance was $8,000 — both 30% higher than their respective 2019 figures. The average U.S. savings account balance has changed over time. The latest value is significantly higher than the average recorded in 1989.

What is the 50 30 20 rule? ›

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

How much cash does the average family have? ›

According to data from the Federal Reserve's 2022 Survey of Consumer Finances, the average American family has $62,410 in savings, across savings accounts, checking accounts, money market accounts, call deposit accounts, and prepaid cards.

How much cash does the average person hold? ›

About 29% of respondents have between $501 and $5,000 in their savings accounts, while the remaining 21% of Americans have $5,001 or more. Few hold much cash in their checking accounts as well. Of those surveyed, 60% report having $500 or less in their checking accounts, while only about 12% have $2,001 or more.

How much cash do I need for a 500k home? ›

A 20% down payment option is a common benchmark for homebuyers. A 20% down payment option gets recommended often because it avoids the need for private mortgage insurance (PMI). For a $500,000 home, a 20% down payment would be $100,000.

How much do most people have in savings? ›

In terms of savings accounts specifically, you'll likely find different estimates from different sources. The average American has $65,100 in savings — excluding retirement assets — according to Northwestern Mutual's 2023 Planning & Progress Study. That's a 5% increase over the $62,000 reported in 2022.

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