Storing Money "at" Home

How much cash do you have at home, right now in your wallet, purses and cabinets? I ask you to ponder this and will share how I went from keeping a minimal amount of cash in this digital age to then increasing that by 10X. I mostly tap and swipe like everyone else with just enough cash for the odd ice cream truck or merchants that give discounts if you pay cash.

Money “at” Home

It’s March 2020 and the world shut down because of the pandemic. Along with toilet paper, we also went to the bank to got $8000 in cash for the Armageddon and Apocalypse that was unfolding. The environment was full of unknowns and unpredictably. So the question is how much cash is too much to store “at” home? The answers will vary, and in the grand scheme of things it’s not a big deal.

Money “In” the House

On the other hand, what if I ask how much of your money should be “in” the house? And not cash or currency but your wealth? How much of your wealth should be tied up in your real estate? Most things are relative and compared to our American neighbors, Canadian wealth is less skewed towards financial assets as the diagram below shows. To be fair in 2022, real estate, stocks, bonds, crypto and most assets experienced a decline.

Flexibility, Agility, Nimbleness

Most would agree with me that real estate is like a big turtle: slow and heavy to move. Being flexible and nimble in and out of this asset class is hard, so usually you get caught flat footed. Hypothetically if Toronto real estate falls while Calgary properties appreciate with the inter-provincial migration heading there, then reallocating and selling the Toronto property to buy a Calgary one is easier said than done. On the other hand, selling stocks of coffee company to buy stocks in an energy company can be done more easily. It’s important to state that this is only for publicly traded companies, but if you own and operate a coffee business and want to wind it up to open a gas station, that’s also like moving a heavy turtle.

Watching Money Burn, Blown or Drip

The recent hurricanes hitting the East Coast of Canada, Florida, Bermuda made me also reflect on another risk in having most of ones wealth in their real estate. Can you imagine watching a million dollars blow in the wind because Hurricane Ian ripped through it? In some locations, forest fires can burn your house to the ground among other natural disasters.

Conclusion

The morale of the story is to be cognizant of how much money you are storing “at” and “in” your home. And if you happen to have stocks in a company in physical certificate form, be sure to not keep those at home. Convert them to digital format, and yes we still come across physical stock certificates in 2022, issued decades ago. We explore these and many other related personal finance topics at our monthly webinar you can join here.

Orlando Lopez,CFP,CIM,CIWM Book a Meeting