Full Transcript
This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.
J.R. Whalen: Here's Your Money Briefing for Wednesday, October 4th. I'm J.R. Whalen for The Wall Street Journal.We often talk about having emergency funds in your bank account to cover things like illness or other unplanned expenses. Financial experts also suggest you have funds, actual cash, just in case
Jeremy Olshan: In the event of natural disaster, like a hurricane, a power outage, a snowstorm, or, let's say, a cyber attack, where you cannot access your money digitally or the ATMs are not working, credit card readers are not working, there's no Venmo or Cash App.
J.R. Whalen: How much cash should you have hidden away at home? We'll talk to Wall Street Journal Personal Finance Bureau Chief Jeremy Olshan after the break.How much money should you put aside in case of emergencies? The Wall Street Journal Personal Finance team spoke to experts about that, and Bureau Chief Jeremy Olshan joins me.So, Jeremy, just to be clear, this is different from having an emergency fund in your bank account. We're talking about having physical cash stashed away in your house?
Jeremy Olshan: Every personal-finance expert or advisor will say you need to have three to six months' expenses saved for an emergency. This is not what we're talking about. This is, in the event of natural disaster, like a hurricane, a power outage, a snowstorm, or, let's say, a cyber attack, where you cannot access your money digitally or the ATMs are not working, credit card readers are not working, there's no Venmo or Cash App, how are you going to pay for necessities? How are you going to pay for anything?
J.R. Whalen: That's the moment we realize how reliant we are on technology.
Jeremy Olshan: Exactly. And most people aren't carrying nearly as much cash, if any cash, right now. So, when these situations come up, if you don't have some set aside, you could really be in a jam.
J.R. Whalen: How much do financial experts suggest people put aside?
Jeremy Olshan: There was no one answer. We asked a whole bunch of people, about a dozen financial advisors. I even reached out to some disaster-prepper experts. If there was consensus, it was, you need, at minimum, the low end was a few hundred dollars, and then, I'd say if we had to average it out, it was, you need a week of expenses. Some said you need at least two weeks. It depends. If you live in, say, Florida or other storm-prone areas, it's pretty common at this stage that there's a ritual to it. The power goes out, you're going to need to pay for gas and food. So having a couple of weeks of expenses in cash is more common in places like that than where the power doesn't go out so often.
J.R. Whalen: And knowing ahead of time if the power might go out and it could take down the ATMs.
Jeremy Olshan: A lot of the feedback we heard from readers, and there was a great deal, it was like, "The power is out. It usually isn't for long. The credit card readers might start working. I could still go to my bank." But the truth is that there's a sustained outage, and I've covered hurricanes, and that could go on for weeks where the financial system is just not functioning in that place. So this isn't crazy town to think you need this much cash in your home. Could be a real need.
J.R. Whalen: I mean, everything from a daily cup of coffee to clothing for your family to some sort of a tarp to cover a hole in the roof.
Jeremy Olshan: And then people mentioned you need repairs done if there are any damages. A contractor might be more willing to come by quickly if you say you have cash, you could pay them right away than if you say, "Well, once the power's back on, I'm good for it."
J.R. Whalen: Cash is king.
Jeremy Olshan: Yeah.
J.R. Whalen: Now, for fear of burglars listening, let's not talk about where people might stash the money, but the challenge here might be hiding it in a safe place, but then being able to find it when you actually need it.
Jeremy Olshan: That was another area there was some division. I mean, definitely an argument to have a safe. Safes are rated for certain degrees of fire resistance. There's also risk of flooding, so putting cash in plastic. But then a lot of folks we talked to said it doesn't really make sense to put all your cash in a safe. If there is a robbery, that's the first thing a thief would go for. Putting money in some other locations can make sense. Of course, that can also cause challenges, too. A, you have to remember all the places you hid the money. You want other people in your family, perhaps, to know where that money is.
J.R. Whalen: It becomes quite a treasure hunt.
Jeremy Olshan: Yeah. I was imagining drawing a map, like, "In this room, and then under the third cabinet, we have 50 bucks." I think there's practical issues with the scavenger-hunt approach.
J.R. Whalen: Some people might hide it in a shaving-cream can. My parents had emergency money and they would put valuables in an empty box of rice and put that in the house somewhere.
Jeremy Olshan: There's a whole cottage industry of products for this purpose. One of the disaster-prep experts, he mentioned a shaving-cream can with a false bottom, which, if you've seen Jurassic Park-
J.R. Whalen: Oh, that's right. Yes.
Jeremy Olshan: And I was like... I thought he was joking, but it really exists and there's a whole bunch of them in there and similar things. So if you really want to get serious... But yeah, I think you're right. The more people probably just do their own makeshift version of that.
J.R. Whalen: But in the event of, say, a natural disaster, you might need more than just cash to grab in a hurry, right?
Jeremy Olshan: There's a website, ready.gov, that the Homeland Security department set up for this purpose, to tell you how to prepare for various forms of emergencies. And it's interesting because they list food, water, canned goods. There's a whole bunch of things on the essentials. Money was not on that list. Cash was on a secondary list saying, "Additional items that might come in handy." To the federal government at least, it's more important to have a can opener than cash.
J.R. Whalen: So eat the non-perishables in the house and then worry about the money.
Jeremy Olshan: Yes. Yeah, having the cash is not going to feed the kids if things really are shut down, just the thinking there.
J.R. Whalen: Now, some generations might think, "No problem. Having cash on hand is a smart idea." But, Jeremy, there are generations currently where having cash on hand is something that never happens.
Jeremy Olshan: I have two teenagers. To them, even having to carry a wallet is a chore. They're so used to just using their phone to pay for things. So, the idea of keeping cash doesn't seem real. The attitudes to cash are definitely generational. Although there are young people who like cash. We did a story on how physical cash helps people save because you can see it, it's tangible. It's like a version of the classic piggy bank, which is harder to do digitally. We now have a whole generation raised on entirely digital money, and a $10 bill is like a historical artifact, not something they encounter in their daily lives.
J.R. Whalen: That's Wall Street Journal Personal Finance Bureau Chief Jeremy Olshan. And that's it for Your Money Briefing.Today's show is produced by Ariana Aspuru, with supervising producer Melony Roy. I'm J.R. Whalen for The Wall Street Journal. We'll be back tomorrow morning. Thanks for listening.
