According to a recent SmartAsset survey, millions of Americans are keeping serious cash stashed under the mattress. This practice not only exposes them to greater risk, but it causes these women to miss out on significant financial opportunities. The study, conducted by financial management app Piere, found that individuals have an average of $544 in cash and valuables stored at home. This common practice, though convenient and decidedly safe-feeling, results in thousands of dollars in preventable damages and insufficient insurance claims.
The survey, which asked 1,500 U.S. adults their thoughts from late January through early February. It found that about 6% of Americans stash their cash in secret storage spots, such as drawers with fake bottoms. In fact, 10% of respondents would rather store their cash in a safe than anywhere else, ranking this storage place as the number one preferred cash hideaway.
Though hiding money at home sounds a little more secure, professionals warn against doing it. Periods of economic turbulence have a tendency to push everyone toward cash, but there’s a smarter way to weather the storm.
If you keep it in a bank, the bank has insurance. - Piere's Shuminer
Storing money in a traditional bank or credit union is always much safer as these institutions are federally insured. This protects your cash from losses due to theft, fire or other catastrophic events.
Keeping cash at home can result in losses of growth just as potentially harmful as investing in the wrong asset. Pierre Shuminer, a member of CNBC’s Advisor Council, drives home the key distinction. Holding cash at home ensures those dollars are not earning high-yield interest in savings accounts or compounding stock market returns.
It's just money that they're leaving on the table. - Piere's Shuminer
According to Bankrate, the average interest rate or Annual Percentage Yield (APY) on the best high-yield savings accounts is around 4.20%. That’s a rate much higher than the average 0.6% APY found in standard savings accounts.
The second risk of keeping cash at home is not being properly insured. Unfortunately, most normal home insurance policies only cover these in a sublimit of about $200 for cash, coins, and precious metals.
If something happens to your cash at home, you only have whatever's listed on your policy. - Shannon Martin
If you keep large amounts of cash at home, remember that risk of theft or fire could result in illiquid, uninsured and unprotected assets being lost. Your insurance policy may not be enough to cover what that costs. An easy way to expand your protection is to get an endorsement to raise your coverage. You must be able to show that you can keep that same amount of cash in your house.
If you're trying to put in the claim for $10,000 of cash that you have stuffed in your mattress, there's probably a lot of questions around that. - Carolyn McClanahan
When the economy gets rocky, consensus wisdom seems to dictate that cash is king. We know that keeping cash on hand to respond to disasters is common sense. They warn that hoarding large sums is detrimental to your long-term financial well-being. The bottom line is cash does not keep up with inflation, thus it loses purchasing power over time.
Having enough cash to get you through a day, perhaps two, actually makes sense. - Carolyn McClanahan
Instead of hoarding savings in dressers, cabinets or under pillows, Americans would be better served if they put their savings to work. High-yield savings accounts, money market accounts and certificates of deposit (CDs) provide all the safety of a traditional savings account plus the possibility for greater returns.
I would not encourage emergency money being in too many different places. - Lee Baker
