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Everybody believes in an emergency fund, but what if you couldn’t get access to such funds in an emergency?  There are many possible scenarios that could occur and prevent you from having funds needed in an emergency.  As such, I believe you should keep some cash hidden at home for use in an emergency.

In the event of a major disaster or blow to “the system”, you could easily see one or more of the following situations occur:

1. Bank failures which could delay withdrawal of your money while the FDIC sorts out the mess – If the FDIC goes under, it will be even more messy (unlikely due to the printing press)
2. Power outages – disable ATMs, online banking, computer systems needed to access funds
3. In such a disaster, vendors and retailers will likely not accept credit cards either, even if they’re capable of processing them.  You will likely need cash.

We heard in 2008 all kinds of threats about total financial system collapse.  Not sure exactly how that would play out but it likely wouldn’t be good for your access to cash.

So, how much cash should you keep on hand?  Most people say you need 3-6 months in an emergency fund, some say even up to a year.  For probably 99% of people, that emergency fund is a savings account somewhere which means you’re reliant on a functioning banking system to gain access to that money.  While, it’s unlikely that you would actually lose that money, the scenarios outlined above could definitely disrupt or delay your access to funds.

To get through a potential disruption or delay, you should consider keeping 10% of your emergency fund (or more depending on your situation) in cash at your property.

Keeping cash on your property of course comes with several risks, namely theft.  I recommend keeping cash hidden in multiple places.  A small safe that is visible is not a wise choice as thieves can simply remove the safe and take it with them.  Be sure to consider other risks such as fire as well.

In conclusion, if you’re truly planning financially for emergencies, then it makes complete sense to have at least some chunk of cash on hand at your house to get your through a disruption to the financial system or the regular day-to-day workings of the economy.  I’d recommend at least $500 and maybe up to 10% of your typical emergency fund in cash at your house.