For roughly the past 100 years, there has been an element of consumer distrust around banks. During the Depression, 9,000 banks failed. There was no FDIC insurance back then (that arose with the New Deal), and some $7 billion in customer deposits vanished. People were left penniless. Those depositors had more than enough reasons to justify their skepticism, disappointment and devastation when it came to banks.
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In the wake of the collapse of Silicon Valley Bank, Signature Bank and First Republic Bank, wariness toward banks has risen again. Scrutiny of and lack of trust in a bank’s security has been particularly strong with Gen Z, who are generally newer to banking than older generations.
A popular way to avoid keeping some (or all) of your money in the bank is to keep it at home. A recent survey from American Express Spending and Savings Tracker determined that 43% of Americans keep their savings in cash. Another survey, by Life And My Finances, found that 91.5% of Americans keep cash at home.
Where Americans Hide Their Cash
Additionally, the Life And My Finances survey found that Americans have a few favorite spots for hoarding their cold hard cash. Here’s where they’re most likely to stash it:
- In a safe: 63.3%
- Inside the refrigerator: 13.3%
- In a suitcase: 6.1%
- In a closet: 5%
- In a water tank: 4%
What do finance experts think of these hiding spots and of keeping cash at home in general? And what’s their opinion on the ideal amount of cash to have on hand for emergency purposes and/or in the event they can’t get to their bank? Let’s find out.
There’s Only One Smart Spot for You To Keep Cash at Home
First of all, these aren’t the only spots where consumers hide cash. One expert has a client who keeps cash in an even weirder place.
“I have a client who keeps their cash and other important files in their dishwasher,” said Eric Mangold, the founder of Argosy Wealth Management. “They ate out and they liked how the dishwasher racks organized their files.”
Experts concur that most of these hiding spots are not the wisest stashing places for cash. There’s only one secret location that is deemed a decent one for hoarding a pile of money: The safe.
“This is the most secure option among the listed choices, as it provides protection against theft and potential damage from fire or water,” said Joel Efosa, the CEO of Fire Cash Buyers. “However, it’s essential to ensure the safe is fireproof and waterproof.”
Why are the other spots such poor ones for hiding cash? Let’s hash it out.
The refrigerator: “While it might sound creative, stashing cash in the refrigerator isn’t the best idea,” said Michael Ryan, founder of Michael Ryan Money. “Fridges are susceptible to malfunction; and, if your money ends up wet or damaged, it’ll lose its value. Plus, there’s always the risk of someone accidentally discovering your secret hiding spot.”
A suitcase: “Suitcases can be a tempting place to hide cash, especially if you travel frequently; however, it’s crucial to consider the potential for theft or misplacement,” Ryan said. “Suitcases also may not offer the same level of protection as a secure safe.”
A closet: “Closets are relatively common hiding spots, but they lack the security features of a safe,” Ryan said. “If you choose this option, make sure to keep your cash well-concealed and not easily noticeable.”
A water tank: “While it may seem inconspicuous, storing cash in a water tank presents several risks,” Ryan said. “Water damage or plumbing issues can ruin your money, and it’s not the most secure or accessible place for emergencies.”
You Shouldn’t Keep Much Cash at Home
Experts are generally in agreement that you shouldn’t keep too much cash in any hiding place — even a safe.
“From my experience, it is not advisable to keep large amounts of cash at home,” said Gary Hemming, an owner at ABC Finance. “This is because it is not secure and can be easily stolen. It is also not insured against theft or damage. It is better to keep your money in a bank or other financial institution, where it is insured and secure. This is especially important if you have large amounts of money.”
So how much exactly should you keep at home? A pretty minimal amount.
“When it comes to how much you should keep at home versus in the bank, I recommend that people only keep a limited amount of cash at home — about the equivalent of a few days’ or a week’s worth of expenses,” said Samantha Hawrylack, a co-founder of How To FIRE. “Keeping more than this at home can increase the risk of theft or damage; whereas, it is better protected in a bank and can accrue interest.”
There’s just too much risk associated with keeping a heap of cash at home. And things can get real ugly if you find yourself in a situation where the cash is in danger.
“My parents’ neighbors’ house caught fire last summer and the older couple who lived inside delayed leaving their burning house and got badly burned in the process to find and save their hidden stockpiles of cash,” said Jesse Cramer, founder of The Best Interest and relationship manager at Cobblestone Capital Advisors. “One of them died within the next three months. Her health never recovered post-fire.”
So, keeping cash in the bank isn’t only safer for the cash; it’s potentially safer for you.
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