Cash on Hand
Updated: May 20
Stories abound about a grandparent who grew up during the Great Depression and is still mistrustful of banks or the eccentric uncle who hides money all over the house. Also common are the struggles disaster survivors face to get the assistance they need to get back on their feet. There are a multitude of examples vividly illustrating the inner workings of capitalism through instances of high price and scarcity immediately following disasters. Some see disasters as an opportunity and quickly buy up the local supply of bottled water, hand sanitizer and the like. Human nature, particularly avarice, is powerful and often overlooked and dismissed as a root cause in disasters and the subsequent suffering.
I strongly believe that careful, focused prepping can blunt the adverse effects of many difficult situations. Thus, cash on hand- for the moment- is on par with water, food, portable generators, firearms, and ammunition. Whatever your rationale, having a cache of cash at home is a good idea and a regular practice for many. As a new prepper, this is an excellent way to get started. Two obvious questions come to mind: how to build the stash and how much do you need?
It’s most practical to build your cache in small denominations such as fives, tens and twenty’s but don’t hesitate to throw in a few larger bills, too. When the lights go out, credit and debit cards are useless at that minute and many a shopkeeper will quickly lose the ability to make change from larger bills. As I mentioned earlier, in times of crisis and disaster, the circumstances and machinations of others can exert enormous influence on your safety and security.
Getting started is as easy as emptying the spare change from your pocket or purse into a jar at the end of the day. In this way, you start small and avoid adding another expense to your monthly budget. Unless you’re eight years old, the days of running to the corner store with a bag full of quarters are over. You’ll need to convert the coins into currency. Interestingly, many banks no longer make coin counters available to their customers and those who do charge a nominal fee. Many grocery stores have coin counters along the wall next to other vending machines but again, there’s a fee involved.
Many people effectively use the envelope method of budgeting but any system that allows you to regularly set aside cash will work. You can always open a separate savings account and withdraw the cash once you’ve reached the target amount. Take a deep dive into your finances and determine which expenditures aren’t essential. Cut them out and use that money to grow your emergency cash. I’ve done this before and was able to cut my wasteful spending by over $300 a month! The key is to contribute regularly. Everyone’s situation is different so resist the temptation to compare yourself to others. What’s important is that you get started and stick with it.
How much you should have on hand depends on lots of factors. Are you a singleton or a family of six? Are you a retiree on a fixed income or a couple of newlyweds just starting out? Are you just getting back on your feet after a significant life change such as a divorce or bankruptcy? Determine what you can afford to set aside and start small. As always, ensure that everyone is onboard with the intention of this being a separate emergency fund for disasters. Financial planning experts recommend having $2,000 to $3,000 on hand, for the entire family. I agree. Relative to your specific situation, this may or may not be a significant amount of money. Again, you’re not trying to keep up with the Joneses, you’re giving yourself a safety net. Of course, if you’re able to do so, set aside more.
The longer the disruption to normal services and everyday activities, the more cash you’ll need. There’s no way to accurately predict what’s going to happen or how others will behave. Your best bet is to plan for a range of scenarios and have backups to those plans. Things cost what they cost. Cash on hand gives you options. Gas stations need electricity to power the pumps that dispense gas. Stores need electricity to power the lights and cash registers. The list of things you suddenly need physical money for can be daunting. Cash on hand gets you on the road to recovery a little faster.