Avoid Getting Caught Short with an Emergency Cash Stash
When the power goes out or a payment network goes down, cash is a useful backup for those who prefer cashless. When the outage is prolonged—for example in an area struck by wildfires, flooding or snowstorms—cash can be the difference between procuring essentials or going without. Experts recently spoke to the Wall Street Journal about how much everyone should keep on hand to stay safe in an emergency.
A major outage of payment provider Moneris rendered large areas of Canada unable to make card payments for part of a late September afternoon, and businesses went cash-only to enable transactions to continue. Fortunately, the network was restored relatively quickly, but this is not always the case.
Major flooding across central China in the summer of 2021 created ‘a digital dark age’ lasting several days, with some businesses—including taxis—requiring up-front cash payments before goods or services were provided. In a nation famously keen on cashless transactions, cash was added to survival necessity lists.
Speaking to the Wall Street Journal, financial advisors and disaster preparation experts proposed figures of $200, or else around two weeks’ worth of expenses for a household as the correct amount to hold in emergency cash. Paul Auslander, a financial advisor based in Clearwater, Florida, added that people living in disaster-prone areas would do well to have a little more cash on hand than those less likely to need it frequently.
Here in Florida, you tend to keep enough cash on hand to get through two to four weeks of no ATMs and electrical power failure sufficient to keep your credit card from working at a grocery store.
William Bernstein of Efficient Frontier Advisors points out that cash can also have benefits beyond covering immediate essentials, saying: ‘After a disaster damages your house or appliances, the repair person is likely to give priority to customers who can pay in cash.’
However much is right to cover an individual or family for the duration of an emergency, experts agree it is crucial to keep the cash secure and protected, for example in plastic bags within a safe rated for fire resistance. It may also be advisable to split the total amount and place some of it into a ‘go bag’—for grabbing quickly should the need to leave urgently arise—and the rest in a more fortified location.