With all the bank failures and the volatility in the stock market, you might be tempted to take your money out of the bank and hide it in your home. In principle it sounds like a great idea. You hide your money somewhere in your home, you know it'll be there when you need it, and you don't have to worry about losing it because the stock market hiccupped.
The problem is that hiding money in your home is quite possibly the worst thing you could do. Here are six reasons why it's a huge mistake.
You earn no interest and inflation will eat up your savings. The number one reason why you shouldn't be hiding money in your house is because you earn no interest on it. 0.00 percent annual percentage yield. Zilch. While online banks aren't exactly paying top dollar on their high interest savings accounts, getting a little a dinero beats getting zero (or less when you consider inflation!).
No FDIC insurance. When you put money in the bank, it's protected by the Federal Deposit Insurance Corporation up to $250,000. When you put it in your house, it's protected up to a few hundred bucks by your homeowners insurance (depends on your policy). If you have a fire and the bills are destroyed, you can claim some of it but expect your premiums to go up.
You might be burglarized. At the bank, you have all sorts of security and protection in the event of a robbery. There's no reason to be a hero at the bank, all the money is protected. When you're at home, almost none of it is. So if you have a few thousand dollars stashed away in the cookie jar, you might be tempted to do something stupid in the event of a burglary (or fire).
You could forget where you hid it. The terrible thing about good hiding spots is that they're good hiding spots. If you put it where you least expect it, chances are you'll forget and never find it! In fact, you may even forget that you hid it in your house in the first place, meaning you'll never know to go looking for it.
Someone might replace your mattress (hiding spot) as a surprise gift. Happy Birthday! I just swapped out your old mattress, where I didn't know you hid thousands of dollars, with a brand new one! Isn't that great? Before you think that sounds too ridiculous, it happened to a woman in Israel.
Your dog might eat it! If you thought the mattress story was outlandish, how about one where a dog ate $800 in cash out of a woman's purse? Yep, eight hundred bucks... "fortunately" the money isn't digested and she was able to recover most of it. So don't hide your money at home! If you're absolutely dead set on hiding all your cash at home, consider these great places to hide cash in your home.
Jim Wang writes about money at his personal finance blog Bargaineering.com.