Why Do You Need Cash in Your Emergency Kit?

Time and again you hear that you should have some extra cash tucked away in your emergency preparedness kit. Usually no exact dollar amount is given but estimates range from a token amount ($25) to several hundred dollars.

In the few small disasters I have been through (a hurricane and a major snowstorm), I have never needed cash during the emergency itself or in the immediate aftermath. Even if one did have some cash, there was often no place to spend it as all the stores were closed either due to power outages or because the employees couldn’t make it in to work. In those situations having provisions like food, water and tools (generator, snow shovel, chainsaw, etc.) were much more important than cash.

Here in the United States, if our family suddenly had to evacuate in an emergency and live on the road for a while, I don’t see how we would need a huge amount of cash. We wouldn’t have to drive too far to get to a major city. Most restaurants and hotels take credit cards and if we really needed cash there is sure to be an ATM somewhere we could use.

There are only three realistic situations I can think of where we would really need some cash:

1. If we were landlocked in our current neighborhood for an extended period and had to buy supplies or tools from our neighbors or purchase services (like snow clearing or tree removal) from visiting contractors.
2. If we had to evacuate and head in the direction of small towns with small businesses who do not take credit cards or checks.
3. If, during an evacuation, we had to pay road tolls, campground fees, etc. where cash was required.

The unlikely situations where we would need cash would be where there is a widespread power outage, a national shutdown of the banking and credit card systems, or a run on the banks. Between the realistic and unrealistic options, there is enough reason to keep some cash on hand. . . but how much?

The answer to this question is probably different for each person, depending on their situation. In our community, the most likely needs for cash in an emergency would be one-time large fees for things like snow clearing, tree removal or car repair and small charges for things like road tolls where we might need quarters or small bills. In a more remote community you might need significantly more cash to purchase food, pay for a private flight to safety, etc.

In the recent Haiti earthquake, I was surprised to read several accounts of the need for cash among the survivors.

“The longest and most visible lines in Haiti’s capital are not for food, water or gas. They are for money. . . . Basic groceries are relatively easy to find for sale throughout the streets of Port-au-Prince. Those with canned goods, some produce and even ice and bread have formed a massive, impromptu market. But most quake survivors do not have the cash to buy any of it.”

–”Haitians Seek Cash as Banks Stay Closed,” CNN, January 21, 2010

Banks opened in Haiti for the first time since the earthquake that killed an estimated 110,000 people almost two weeks ago. . . . Cash withdrawals were limited to 2,500 Haitian Gourds to ensure there is enough money on hand and to discourage a run on the banks. . . . Bank officials worry lack of Identification could be a problem for many customers.  Many Haitians lost their documents in the earthquake.  Bank employees have been relying on secret questions and quizzing customers on personal details.

–”Haiti Banks Open But Tempers Flare,” VOAnews.com, January 24, 2010

“Musgaile Bolivar left his collapsed home in the pulverized town of Leogane at 4 a.m. and traveled more than 20 miles to Haiti’s capital, only to wait all day Tuesday in front of a closed door.

Each time the door opened in the yellow Unitransfer building in Port-au-Prince’s decimated downtown, an anxious few slipped in amid screaming, shoving and arguing.

–“Money slowly trickling into Port-au-Prince, Haiti as banks and wire transfer offices begin to reopen,” NY Daily News, January 31, 2010

As you can see from the experience in Haiti, if you do need to get money during a disaster, it can be painfully hard to get it. So, stashing away an appropriate amount for your family is a good idea.

If you do decide to keep money in your home, where is the best place to keep it? In the sugar bowl? The mattress? A piggy bank? The two biggest threats to your money at home are likely theft and fire. Cash is the most commonly stolen item in home burglaries.

With regard to theft, you should revisit your home security strategy in general. These tips from the Hartford insurance group emphasize locking doors and windows at all times, not leaving spare keys in easy-to-find places and installing a home security system. Similarly, the U.S. Fire Administration emphasizes routine fire safety procedures like installing smoke alarms and exercising caution with use of electricity and portable heaters.

This article from a security consultant suggests that jewelry is a commonly-stolen household item and not to store valuables in a jewelry box on top of the dresser or in the bathroom medicine cabinet. Other common places thieves look? Under the mattress, under the bed, in dresser drawers and in the bedroom generally. If you opt for a safe, choose one that is heavy or bolted to the floor. Otherwise, all you have done is conveniently packaged all your valuables for a would-be thief. The thief could quickly grab your safe and jewelry box and head for the exits.

You can get clever with your money hiding places. YouTube is full of videos (particularly from teenage boys) on where to hide your money or how to create secret hiding places from ordinary objects like soup cans, books and cereal boxes. Here is one example from stashyourswag.com:

If you go this route, just make sure that you remember where you put your secret cache and make sure it doesn’t get thrown out by mistake, (like the Israeli woman whose daughter threw out her mattress with over $1 million inside)! Also, since the point of all this stashing is to make sure you have money ready in an emergency, make sure that the money (as well as the rest of your emergency kit) is in an accessible spot in the event disaster strikes.

Have you ever needed cash in a natural disaster situation? Do you have a money hiding strategy? Please share in the comments.