Investor Column | How much cash should you hide under your mattress?

I probably shouldn’t be writing this. Sometimes I imagine getting mugged with not a lot of cash on me.

I fear the Bradenton Herald, on a slow news day, might write, “Jim Germer, a longtime Bradenton CPA, and a financial advisor, was mugged.”

“The mugger became fighting mad when discovering Germer only had $5,” reports the Herald. Schadenfreude of colleagues and other yentas exclaiming, “Only $5!” would be mortifying.

You may think worrying about this is a bit neurotic, but guess what? I’m not alone. Millions of American’s aren’t carrying much cash these days.

A 2017 U.S. Bank Cash Behavior Survey says 50 percent of the people responding carry cash less than half of the time. Nearly half of people responding walk around town with less than $20 and a shocking 76% take have less than $50.

Leaving home without cash at one time was once unthinkable. Not anymore. Credit and debit cards, Apple Pay, and other tech changed the need for carrying cash. Minimum purchase requirements for using plastic are rarely occurring.

Financial advisors often recommend leaving about three to six months of living expenses in a bank or liquid brokerage account. That’s fine, but let’s talk about risks other than mundane emergencies like losing a job or unexpectedly replacing an AC or a roof.

Recently the power went out in Texas due to cold weather, and the power grid almost collapsed. And it wasn’t that long ago in Manatee County that thousands of us went a few weeks without electricity.

So if you can’t buy Pepto Bismol at Walgreens in an emergency because computers are down, cash is the only game in town. The same goes for groceries and other necessities. If ATMs don’t have the power, you can’t get some money for groceries and essentials.

How much hard cash do you really need? And is it OK to hide some money under your mattress or burry pickle jars with cash in your backyard?

Start planning. Say a terrible hurricane is headed toward Sarasota and Bradenton. Hopefully, you have $400 at home already. If you don’t, go to an ATM with power and cash. Consider taking out about $400 and another $400 for a spouse. It should get you through, about three days, until things normalize. Soon the Red Cross brings food and water, and roads are cleared to buy food and supplies or drive to a hotel or a family member with power.

$400 likely covers many emergencies, but not a catastrophe. Small denominations, like $20s, are advisable. In rough times, someone might not have change for your Ben Franklins.

Fire, robbery, impaired memory, and inflation are risks of keeping cash at home. But for our purposes here, I’m saying the chances are worse if FPL can’t supply power for a prolonged outage.

I’d rather have $400 of cool, hard cash if things get super crazy. Most credit and debit card companies have computer redundancies that allow operating in a few days.

I’m not discussing the opportunity cost of losing interest, dividends, and capital growth on $400. I believe it’s not significant. So consider hiding or carrying about $400. I’m not advocating keeping $10,000 or more at home. That’s crazy.

OK, but where to store cash at home? If you have a home safe, use it. Reduce the risk of robbery by acquiring a home security system. Other hiding spots may be in a file cabinet in some unsuspecting manilla file folder, a lining in a jacket. Avoid burying cash underground because bills rot and degrade. Pickle jars, mattresses, anyone?

Jim Germer is a Bradenton CPA and financial adviser at 3655 Cortez Road W, Suite 110, Bradenton, Florida 34210. Call (941) 746-5600 or email jim.germer@ceterafs.com. Securities are offered through Cetera Financial Specialists LLC (doing insurance business in CA as CFGFS Insurance Agency) member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Cetera entities are under separate ownership from any other named entity.