What do you have in your wallet?

6 Reasons You Need Some Cash

by Rich Finzer

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Unless you've been living under a rock, you've read about the bank failures brought on by our never ending economic quagmire. The FDIC guarantees the funds of depositors, but until the bureaucratic mess associated with any bank failure is sorted out, you may not have ready access to your accounts. I'm not a banking expert and I don't know how much time elapses before all is put right, but I do know and have always known that maintaining a stash of cash is a prudent idea.

Most financial experts recommend building an emergency fund in case of an emergency. Now I don't think the U.S. is on the verge of a Eurozone banking crisis, but there are heaps of occasions when a small cash hoard is much handier than checks or an ATM card.

Natural disasters: When tropical storm Sandy hit the eastern seaboard, millions of folks and businesses were without power. ATM machines stopped working, and those that did were quickly emptied of cash. I don't care whether you've got a million bucks on deposit. If you don't have access to your money, you're as destitute as any homeless guy. Here in upstate New York, tropical storms never occur, but blizzards do with the same scenarios unfolding.

The net fails: During catastrophic events, the internet may become temporarily unavailable. If that occurs, your smart phone, PayPal account, Wifi access, or online banking apps become unfulfilled dreams. There will be no swiping your "smart card" for a $4.95 cup of coffee, no hailing a taxi with your GPS enabled "taxi app," and no emailing mom to ask for an emergency loan. The guy with cash in his pocket hops in a taxi and waves to you as he departs.

Checks are not cash: Some folks prefer to pay by check, creating a verifiable paper trail in the process. To the recipient, a check is not cash. A check is a promise to pay the bearer cash after it's been processed by the banking system. Sometimes checks bounce, nicking the bearer with an associated bad check fee. In the vernacular, "cash don't bounce." View a check through the lens of the natural disaster scenario. In that instance, until power is restored and the banks reopen, a check is a worthless piece of non-negotiable paper.

Caught short: Every one of us has encountered times when the money ran out before the month did. Last time it happened to me, I dipped into my war chest and gave myself a "payday loan." When my Social Security, pension and IRA distributions arrived, I paid myself back with zero impact to my credit score.

Traveling: It doesn't happen very often, but isolated businesses still exist that do not accept credit cards and lack an onsite ATM machine. So when I travel, I carry about $100 in "tuck money" in my wallet. It definitely beats running out of gas and the corresponding embarrassment.

Home based businesses: I sell firewood and rent space for boat storage. Many of my customers pay me in cash. So in my cash kitty, I maintain an ample quantity of small bills in case I need to make change.

How to get started: Don't feel as though you need to set aside a monster sum, calculate what you'll likely need to cope with the situations I've outlined. Second, don't lament the lost bank interest. Interest rates are at historic lows anyway, so you're not sacrificing very much. What you're really doing is swapping the wages of convenience for peace of mind.

Rich Finzer resides in upstate New York. During his 43 years as a writer, he has published over 1,000 newspaper, magazine, and Internet articles. His first book Maple on Tap is currently available through his publisher ACRES USA. His novel Taking the Tracks is available through Amazon.com.

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