According to experts, you need a certain amount of cash at home to be able to react to exceptional financial situations. But you shouldn't store too much at home.
It always happens when you least expect it: something breaks or needs to be returned, but it just doesn't fit into your monthly financial planning. In such cases, experts recommend one emergency fund . And this should also include cash at home.
Emergency Fund: Experts Recommend This Rule
Saving money seems logical. In that case, there are very specific recommendations about how big your emergency fund should be and how to save it. According to experts, this also includes keeping a certain amount of cash.
When is this useful? The Federal Office for Civil Protection and Disaster Assistance (BBK) speaks of a very specific scenario. Because “[…] in case of a power outage [funktionieren] “The ATMs are not there either.” This doesn't just mean that you can no longer withdraw money. As a result, digital payment options are also limited.
The guide does not explain how high it should be. The experts from the Upper Austrian Civil Defense give a very clear answer: “Every family should have a cash reserve at home; around 500 euros in smaller banknotes is recommended.”
How do I hide my emergency fund at home?
Anyone who has saved an adequate amount is covered in case of emergency. But then you face another problem. Keeping cash at home can quickly go wrong in the event of a robbery. That's why it's important to find a good hiding place for your emergency fund.
On Amazon you can find several items suitable as a money hiding place. If you don't want to buy anything extra, you can be creative in other ways and keep the money a secret. But be careful: criminals could quickly find it under the mattress, in the coffee can or on the shelf.
If you have too much money at home, you will lose insurance coverage
And be careful: once you reach a certain amount of money saved, both in cash and in your account, you may lose part of your insurance coverage. For example, if you don't take proper security precautions for cash, you will only be refunded a smaller amount if it is stolen.
There is a limit of 100,000 euros of money in the account. The so-called deposit insurance of the federal government guarantees that the money of each saver in a bank is protected by the State up to an amount of 100,000 euros, according to the Consumer Service Center. The Federal Ministry of Finance confirms this.
However, if this amount is exceeded, there is a risk of loss in the event of bank failure, as confirmed, for example, by the online bank N26. Therefore, it is important to always monitor the amount of your emergency fund and plan accordingly.
Sources: Federal Office for Civil Protection and Disaster Relief, Upper Austria Civil Protection
By Dana Neumann