Those who believe in investing in assets and stocks may find cash saving absurd. However, a recent survey revealed that nearly 43 percent of Americans actually prefer to keep their savings in cash. Interestingly enough, more than half of these Americans plan to stash their cash in secret home safes. On the surface, it might seem like a smart idea. After all, who doesn’t want to keep their savings a secret, hidden from the eyes of financial institutes? There is, however, a downside to stashing cash.
Before we delve into the details of the risks involved, we should dissect the reasons behind the rising trend of keeping money in home safes rather than banks.
Why Are Americans Going for Home Safes?
The leading reason is mistrust. Over the past two decades, Americans have seen enough financial distress to stop trusting banks and even government funded financial institutes. Besides, the last decade was full of unexpected tax hikes and many banks have increased the number of various forms of the fee they deduct solely for letting you keep your money in their lockers. Home safes, in contrast, seem like a one-time investment where your one dollar bill will remain a one dollar bill no matter how long it stays there.
The economic instability has also shaken the general trust in investment vehicles, such as stocks. It is one reason many people believe that they might as well keep their savings in cash rather than taking the risk of investing it. There is no surprise that they are their stashing cash instead of making an investment.
Lastly, let’s not forget that keeping money in a secret safe is one of the sure shot ways to evade heavy taxes on your savings.
All of these factors have played a role in driving a big chunk of the population back towards the old ways of saving money in home safes.
Better Safes with Better Security
Other than all of the factors that have caused an air of mistrust between banks and consumers, there are a few developments that make home safes seem safer. First of all, companies are developing smarter and safer products that make you feel like you have more control and freedom. Secondly, many insurance companies are providing insurance for the money you are keeping at home.
Is Stashing Cash Really a Good Idea?
Stashing cash might seem like a very smart idea, but the drawbacks are real. Here are some of the reasons it may not work as much in your favor as you are expecting.
First of all, it isn’t safe. Despite the insurance policies, stashing cash at home makes it vulnerable to more threats than keeping money in the bank. Most insurance policies only cover theft or robbery but there are a number of things that can literally turn that cash into a pile of trash. Fire or flood, your money will be worth nothing if it is ruined in an incident that isn’t covered by the insurance provider. Worst-case scenario: Imagine your pet or toddler finding your secret cash stash and tearing it to bits. This is also the kind of incident insurance providers aren’t likely to protect your savings against.
Cash Doesn’t Grow
As the value of currency changes, the worth of your cash decreases. While your one dollar bill will remain a one dollar bill decades later, you may hardly be able to buy half of what you can buy now. A standard savings account, on the other hand, will earn enough interest to cover the time value of money.
In simple words, money kept in your home safe is hardly even safe.
When Is It Best to Stash Cash?
Keeping cash at home for the sole purpose of keeping your money safe isn’t the smartest thing to do. However, it doesn’t mean that it is always a bad idea for everyone. The only good reason to keep cash at home is when you do not plan to save it for long or when you finally take out all of your savings and plan to spend it all.
Not relying on banks and hiding your savings from the watchful eyes of the government may seem like a smart move, but it actually limits your chances of making more money out of the cash you have. Think twice before buying that home safe.
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