In an era when savings accounts offer virtually no interest earned, people are still wary of anything but the safest stock options, and even CDs provide a dismal return unless you promise to lock away your investment for a lifetime, is it any wonder why some savers are going old school? During the Great Depression (and for centuries prior), hiding money under the mattress or in other spots around the house was perfectly normal. After all, before FDIC security was in place, if a bank went under, your cash went with it!
Fortunately, your money is now reasonably safe if it’s kept in a bank. But many Americans are reverting back to more traditional methods, even though, as confirmed by increased holiday spending, the FDIC reports that people are trusting banks more these days.
But what about those households that are fed up with financial institutions? According to reporter Amy Clark with CBS News, “As many as 28 million people in the United States are forgoing traditional financial institutions because of mistrust, cultural and language barriers or a belief that by the time all the bills are paid, there will be nothing left for an account.”
Why We Do It — and Why It Works
It’s not unusual or uncommon to not trust financial institutions, especially after the Wall Street fallout many are still recovering from. A slew of baby boomers and elders lost their entire retirement savings during the Great Recession, forcing them back to work, probably for good. According to the AARP’s Public Policy Institute Report, “The Great Recession drove millions of older Americans to deplete savings accounts, put off medical or dental treatment and reduce their retirement expectations.” No wonder many of them pulled their savings/checking accounts and made their own nest egg right at home.
There’s definitely an upside to having cash at the ready, as long as it’s stored safely. Obviously, stuffing a few hundreds under the bed isn’t secure since bedrooms are the first stop for savvy burglars and thieves. However, a fireproof safe that’s unbreakable and bolted into place (as well as hidden) is a pretty safe bet. If “home savings” is done well, it’s relatively safe, but don’t put your entire nest egg in your humble abode. Unfortunately, the vast majority of “mattress stuffers” don’t spring for the most effective protection.
The Downside to What’s Under the Bed
There are many threats to storing money at home that don’t exist in financial institutions—break-ins, fires, natural disasters and even forgetting where you hid the money, are more common than you think. The cost of a fireproof safe and the price of installing it properly is enough to turn off many homeowners from taking the safest route. They think they’re “saving” by hiding cash in Ziploc bags around the home (even buried in the yard), but there are many cases of new homeowners discovering treasure troves old tenants forgot.
Hiding money at home will always be “a thing,” especially for older Americans, those with barriers to traditional banking, or anyone who’s been burned financially in the past. If a financial institution just isn’t an option, play it smart and invest in adequate security at home. Anything less and you’re gambling on your financial future.