Don't Hide Your Cash In Your House

Last week, Carey found a Frugal Dad article offering up 7 places around the house to stash your cash. While you should keep emergency cash around the house, don’t put too much!

Here are six reasons why your money should be in a bank and not your flower pot:

You earn zero interest. The number one enemy of a saver is a little demon called inflation. Inflation is the erosion of the purchasing power of your money. When you put your money in a high yield savings account, you get a little protection against inflation because you’ll be earning interest. It won’t be much, but you’ll get zero percent interest on money you hide in your house.

You won’t need that much emergency cash. Think of all the reasons you might need actual cash in your house, there aren’t that many. We generally keep about a hundred dollars of cash in the house, which has never been insufficient for anything.

You’ll forget where it is. If the hiding spots for your money are that good, you might forget you hid money there in the first place. If you forget, what good is it?

A thoughtful gift can become a disaster. Let’s say you do remember where you’ve hidden your cash, what then? Well, what if your daughter replaced your tattered old mattress? What if you knew you put a million bucks in it but she didn’t? If that sounds outlandish, it happened in Israel.

Your dog might eat it. You can put this one in the outlandish but true category but your dog might eat your money, right after he eats your homework. An eight year old Lab-German shorthair ate $800 in cash out of a woman’s purse (some of which she recovered “later”).

FDIC protects against fire in the bank, but not in your house. If you hide your money in the house and there’s a fire, you have very little by way of protection. There is generally a limit to how much cash is protected (~$200) and that is, of course, subject to your deductible. You wouldn’t have to provide proof but the coverage is very limited. It also might compel you to make bad decisions. Instead of running for the door, you might stay longer and try to recover your money.

So keep a little bit of cash in the house, but not too much. Have you ever heard a success story of untold riches start with “So, I put all my savings in my mattress…”

Jim writes about personal finance and money issues at

Photo: cutiemoo

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