With the financial crisis in 2008 and multiple banks around the world collapsing, or being taken into government hands, people aren't so trustful of banks as they used to be. The fear of losing all your money in the event of a banking collapse undoubtedly plays on your mind. But with the risks of keeping your cash at home, is it really worth shunning the banks in favour of hiding your fortune under a mattress?
Legal issues of keeping cash at home
There's no legal limit on how much money you can keep at home. Some limits exist with bringing money into the country and in the form of cash gifts, but there's no regulation on how much you can keep at home. If someone wanted to store £1 million at home, there are no laws against it - the practicality of such an action makes this a poor decision to take.
And what you have to take into account is police attention. If law enforcement catch wind of thousands of pounds in used notes being stored at home they're going to start asking some serious questions. It's a hassle nobody wants to deal with.
The practicality of keeping cash at home
On a practical level, keeping large sums of money at home needs a lot of careful consideration. For a start, you have to find places to hide it securely. If you want to store thousands it's not easy to keep track of it all. One huge pile of bank notes can disappear in an instant if you're unlucky enough to lose your house in a fire or flood. Therefore sensible fireproof safe storage would be wise.
Moreover, you'll become a magnet for thieves. Stories of Asian families being targeted as a result of family jewellery and gold being stored within the home have been rampant in recent months in areas of high ethnic population like Bradford. Even if you decide to invest in a state-of-the-art safe it doesn't mean a thief won't try his luck. If he knows he could make a year's wage in one risky night, he's going to try it.
Insurance issues for cash at home
Contrary to what many people think, you're already insured against the possibility of a banking collapse. Currently, the government automatically covers up to £85,000 per eligible person, per bank, building society or credit union. up to £170,000 for joint accounts if a bank collapses. If you possess more than this, simply split your fortune and store it with different banks because the whole of the banking world isn't going to collapse simultaneously.
Now, if you decide to store money at home, most home insurance policies only cover cash losses up to £2,500. Anything above this figure is gone forever. Is this something you really want to comprehend?
A lot of elderly people have lost most of what they own simply because they've taken this route when it comes to money.
Inflation considerations
For every year you store considerable amounts of money at home it loses value. Money in circulation isn't protected against inflation, whereas in a bank the value remains the same; and sometimes it even rises. Only by keeping your money in a secure financial institution can you protect what you own.
So What's the Answer?
Whilst there are no laws against how much money you can keep at home, there are practical implications. Those fortunes which don't have the safety of a bank lose value and carry considerable risk. More importantly, the assurances of government and the banks mean you already have a stronger insurance policy than any independent contents insurance policy can offer you.
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