A Guide to Keeping Cash at Home

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Updated on Thursday, June 27, 2019

Man with cash in hand that he's keeping at home

Most people are used to keeping cash at home for emergency situations. But how much cash is too much, and where you should you keep cash at home that’s safe?

Unexpected expenses can pop up in all kinds of ways: A car repair or a medical bill can catch you off guard, you might need money to help out a friend or relative. The best way to be prepared for life’s unexpected developments is to have an emergency fund that can cover your basic financial needs for three-to-six months. It’s typically advised that you stash your emergency funds in a liquid, high-yield savings account.

But for many people, keeping cash at home provides them with the peace of mind that comes with being prepared for emergency situations. How much should you keep on hand? The average daily amount of cash Americans held was $59 per person, according to the 2018 Diary of Consumer Payment Choice compiled by the Federal Reserve.

In this guide, we’ll explain how much cash to keep at home and how to keep your physical money safely.

Why do people keep cash at home?

For most people, keeping cash at home is a basic necessity, for multiple reasons. Cash is most convenient for small-dollar payments or purchases. Almost 87% of Americans use physical money for transactions valued under $25, according to the 2018 Diary of Consumer Payment Choice.

Some people like to keep a portion of their emergency funds at home, just in case. They feel secure when they know they have cash on hand for when natural disasters hit, the power goes out and you aren’t able to withdraw money from ATMs or banks.

For some people, privacy concerns are a reason to keep lots of cash on hand, including at home. Credit card companies and businesses can track what you buy, how much you spent on your purchase and where you made the purchase with credit cards. Some people would like to keep some purchases completely private. The only way to avoid leaving a digital trace is to use cash.

How to safely keep cash at home

If you keep physical money at home, safety is your first and foremost concern. FBI data show that there were more than 1.4 million burglaries in 2017, nearly 70% of which occurred at residential properties. Victims suffered a total of $3.4 billion in property losses.

Ken Tumin, founder and editor of DepositAccounts.com, which along with MagnifyMoney, is a LendingTree-owned site, suggests you only keep at home the maximum amount that could be useful during natural disasters when power is cut off and ATMs are down.

“I would say having between $300 and $1,000 of cash at home can be useful for unexpected expenses that require cash or times of natural disaster,” Tumin said.

A staff member at Frontpoint, a Virginia-based home-security system company, suggested that having a heavy safe that’s not easy to move is a good option to keep cash safe at home. For more peace of mind, Tumin suggests, the best place to store physical money is a fireproof safe that’s attached to the foundation of the house.

Break-ins are not your only concern. In general, you should save money in places not prone to burglary, fire or flood, or discovery from people coming and going. If you don’t have a safe, stash your cash in fireproof or waterproof containers that can be locked.

Where you shouldn’t keep cash at home

Burglars are usually in and out of properties quickly during a break-in. Be sure to hide your physical money in places that are out of plain sight or not easily reachable, such as your attic or deep in the back of a closet.

The mattress is certainly not a safe spot to store cash. According to market research firm Edelman Intelligence, about 1 in 10 older Americans report hiding cash in their homes, including under the mattress. If the mattress is a known place where people keep their cash, the burglar is likely informed about the secret.

While It makes sense to hide cash in spots where burglars wouldn’t think to look, Tumin advised you avoid locations too obscure. “You might forget where you stashed your cash,” Tumin said. “Also, it may be very difficult for your family to find if you die or become incapacitated.”

Keep extra cash at the bank, not at home

Here’s a final piece of advice: Keep most of your money in an interest-earning checking account or savings account. Sure, it’s not bad to stash money at home, and keeping the right amount of cash on hand is necessary. But letting money loaf around your house means you’re missing out on the interest you could be earning at the bank.

A better place for your excessive cash would be a liquid deposit account that can accrue interest over time. After all, you probably will not touch your emergency fund frequently. The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 of each person’s money deposited per account, per bank. There is a slew of online banks that are FDIC-insured and offer higher interest rates on checking and savings accounts than those of brick-and-mortar banks.