How Much Cash Should You Keep at Home in Case of an Emergency?
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Here's your money briefing for Wednesday, October 4th. I'm J.R. Whelan for The Wall Street Journal. We often talk about having emergency funds in your bank account to cover things like illness or other unplanned expenses. Financial experts also suggest you have funds, actual cash, just in case.
In the event of a natural disaster like a hurricane, a power outage, a snowstorm, or let's say a cyber attack where You cannot access your money digitally. The ATMs are not working. Credit card readers are not working. There's no Venmo or cash app.
How much cash should you have hidden away at home? We'll talk to Wall Street Journal Personal Finance Bureau Chief Jeremy Olshan after the break.
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How much money should you put aside in case of emergencies? The Wall Street Journal personal finance team spoke to experts about that, and Bureau Chief Jeremy Olshan joins me. So, Jeremy, just to be clear, this is different from having an emergency fund in your bank account. We're talking about having physical cash stashed away in your house?
Every personal finance expert or advisor will say you need to have three to six months expenses saved for an emergency. This is not what we're talking about. This is in the event of a natural disaster like a hurricane, a power outage, a snowstorm, or let's say a cyber attack where you cannot access...
Why do experts recommend keeping physical cash at home for emergencies?
Your money digitally or the ATMs are not working. Credit card readers are not working. There's no Venmo or cash app. How are you going to pay for necessities? How are you going to pay for anything?
That's the moment we realize how reliant we are on technology.
Exactly. And most people aren't carrying nearly as much cash, if any cash, right now. So when these situations come up, if you don't have some set aside, you could really be in a jam.
How much do financial experts suggest people put aside?
There was no one answer. We asked a whole bunch of people, about a dozen financial advisors. I even reached out to some disaster prepper experts. If there was consensus, it was you need, at minimum, the low end was a few hundred dollars. And then I'd say if we had to average it out, it was you need a week of expenses. Some said you need at least two weeks. It depends if you live in, say, Florida or other storm-prone areas. It's pretty common at this stage that there's a ritual to it. The power goes out, you're going to need to pay for gas and food. So having a couple of weeks of expenses in cash is more common in places like that than where your power doesn't go out so often.
What kinds of emergencies can make digital payments and ATMs unusable?
And knowing ahead of time if the power might go out and it could take down the ATMs.
A lot of the feedback we heard from readers, and there was a great deal, was like, you know, the power's out. It usually isn't for long. The credit card readers might start working. I could still go to my bank. But the truth is, there's a sustained outage. And I've covered hurricanes. And that could go on for weeks where the financial system is just not functioning in that place. And so this isn't crazy town to think you need this much cash in your home. You know, could be a real need.
I mean, everything from a daily cup of coffee to clothing for your family to some sort of a tarp to cover a hole in the roof.
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