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Here’s How Much Cash You Need Stashed if a National Emergency Happens

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Here’s How Much Cash You Need Stashed if a National Emergency Happens​


Jaime Catmull
Tue, May 24, 2022, 10:32 AM


Julia Sudnitskaya / Shutterstock.com

Julia Sudnitskaya / Shutterstock.com
You've probably heard time and again that it's important to have a rainy day fund set up "just in case" something unexpected were to happen. But we're now at a time when having an emergency fund is more vital than ever.
See: 9 Best Small Business Ideas To Make Money From Home
Find: 7 Financial Habits That Improve Your Daily Life

The coronavirus pandemic was a prime example of how something unexpected can have devastating effects on the economy at large and on an individual level, too. While we all hope the worst of it is over, here's how to be prepared in case it's not -- plus how to set up a fund for unexpected future national emergencies.
mammuth / Getty Images/iStockphoto

mammuth / Getty Images/iStockphoto

Why You Need a National Emergency Fund​

Part of being prepared for any contingency, big or small, is having a reserve of emergency cash at your disposal at all times. When you can't rely on accessing your funds electronically, you'll need some legal tender to buy food, gas or other necessities.

"Whether it's Mother Nature or some other disaster out of your control, you always want to be prepared by having some emergency cash on hand," said Annalee Leonard, an investment advisor representative and president of Mainstay Financial Group. "Banks and ATMs may not be up and running for days after a strong storm. I recommend my clients have three to five days' worth of spending money, just in case."
stevanovicigor / Getty Images/iStockphoto

stevanovicigor / Getty Images/iStockphoto

How To Decide How Much To Save​

To decide how much to save for an emergency fund, you'll need to ask yourself a couple of questions:
  • How much will I need for an extreme catastrophic event?
  • How much can I afford to save?
"It's wise to have a small amount of physical cash at home for the truest of emergencies when banks are not operating," said Priyanka Prakash, managing editor at Fit Small Business, a company that finds the best small-business software, services and financing options.
Learn: 15 Ways To Make Money Fast
Shutterstock.com

Shutterstock.com

Aim To Save $2,000​

"Individuals should be prepared to pay for essential or non-discretionary expenses out-of-pocket," said Brett Tharp, CFP and financial planning education consultant at eMoney Advisor. "Temporary lodging or shelter, fuel, food, water and necessary medications fall into this category. This will differ for each person depending on their level of preparedness or perception of how likely a catastrophic event might be."
Two-thousand dollars should cover those costs.
"The rule of thumb I advise my clients is to keep $1,000 to $2,000 in cash in case banking operations are shut down due to a national emergency or catastrophe," said Gregory Brinkman, president of Brinkman Financial in Tulsa, Oklahoma.
RichVintage / Getty Images/iStockphoto

RichVintage / Getty Images/iStockphoto

There's No 'Magic Number' for How Much To Save in Your Emergency Fund​

Despite these suggestions and what some other experts might advise, though, there's no magic amount you should have nestled away in your emergency fund. The answer for how much you should save for an emergency situation is that you should do what feels right to you. No matter the amount, an emergency fund is absolutely necessary -- so make it a priority to build one.
Even if you can't afford to save much, it's better to save something rather than nothing, Prakash said. So if you can only afford to set aside $1,000 for an emergency fund, that's better than not saving at all.
Shutterstock.com

Shutterstock.com

The Cost of Covering Necessities​

Take into account that in a national emergency, inflation will rise, demand for necessities will increase and price gouging will likely ensue. With all that in mind, in addition to your regular emergency savings, you should prepare to have enough to cover the following costs in a national emergency situation:
Water -- 10 gallons$28
Gas -- 20 gallons$84
Portable solar generator$130
Battery-powered lights$20
Emergency solar hand-crank radio$20
Prices for gas and water will likely be much higher in the event of an actual national state of emergency. Note that the items in the table are emergency purchases for one person.
Shutterstock.com

Shutterstock.com

The Cost of an Emergency Kit​

You should already have some kind of emergency kit that includes these recommendations from Money.com:
  • Batteries and tools: $122
  • First aid supply kit: $48
  • Nonperishable food: $120
  • Medication: $38
  • Spare clothing: $44
Kyryl Gorlov / Getty Images/iStockphoto

Kyryl Gorlov / Getty Images/iStockphoto

How Is a National Emergency Fund Different From Other Savings?​

Unlike a regular emergency fund -- which should be used to cover things like unemployment, medical or car emergencies, emergency home repairs or bereavement-related expenses -- a national emergency fund should be reserved for catastrophes in which you cannot use credit cards.
Regular emergency savings should be stashed in some kind of savings, money market or certificate of deposit account. Your savings for a national emergency fund should be kept mostly in cash.
"Avoid the stock market because you can lose (your national emergency money) right when you need it the most," Prakash said.
Neither type of emergency fund is meant to be dipped into or spent like disposable income, and creating one takes the same approach as that for a rainy-day fund, a nest egg or any other savings.
RichVintage / Getty Images

RichVintage / Getty Images

How To Start an Emergency Fund​

The first step in saving for a national emergency fund is creating a budget, said Rachel Cruze, author and host of The Rachel Cruze Show and The Rachel Cruze Show podcast.
"A zero-based budget is best," she said. "This is where your income minus expenses equals zero, so you are giving every dollar a name. Even if your income has changed or you've lost your job, list out any possible income you could have coming in and all your expenses. This will help you to see what can be cut from your budget so you can stretch your money further and find ways to save."
Good To Know: How Much Money You Should Keep in Each Type of Banking Account?
Jacob Ammentorp Lund / Getty Images/iStockphoto

Jacob Ammentorp Lund / Getty Images/iStockphoto

Set Savings Goals​

Once you set your budget and see how much money you can realistically dedicate toward savings, it's time to start setting some goals. Financial author Dave Ramsey and many other experts suggest starting small. If you're looking to set aside $3,000 in one year, that would mean you'll have to save $250 per month over the next 12 months. Extend your savings goal to 18 months, and that's $166 per month.
Or you can automate saving a percentage of your income. "Put aside about 10% of your monthly take-home income for your emergency fund," Prakash said.
anandaBGD / Getty Images

anandaBGD / Getty Images

Make Saving for Your Emergency Fund a Priority​

It's especially vital right now to focus on saving, with job insecurity at a high and stock values plummeting.
"It's important to not panic but to be proactive in planning your finances over the next few months, considering different strategies for saving more money and having cash on hand," said Chalmers Brown, CTO and co-founder of Due. "I recommend doing a review of your new budget, considering your current job situation as well as accounting for reductions in spending. For example, since you are quarantined, you are most likely spending considerably less on gas, eating out and entertainment. Take that money out of your bank that you would have spent and put it in a lockbox as cash."
Geber86 / Getty Images

Geber86 / Getty Images

Put Other Contributions on Hold While You Build Your Emergency Fund​

When you're in the process of building your emergency fund, limit other saving contributions or debt repayments to only the necessary amount, Tharp said.
"For example, contribute enough to your company's 401(k) to get the full company match and allocate the additional funds to your emergency savings," he said. "Additionally, maintain the minimum payments on outstanding debt to keep loan balances steady while directing additional money toward your emergency fund. Once you've built up enough savings, you can continue to contribute money to other longer-term goals."
kali9 / iStock.com

kali9 / iStock.com

Should Your National Emergency Fund Be All Cash?​

If you've managed to save up $15,000 in emergency funds over time, for example, it might not be a prudent idea to have all that money in cold hard cash sitting around your house. For one reason, it's unsafe, and two, it might actually be more than you need.
"There is a price to putting away a large amount of money for a rainy day: That price is inflation, which has averaged about 1 to 2% per year in the last few years," Prakash said. "To minimize loss from inflation, it's wise to not keep too much of your emergency fund at home in physical cash. By keeping the bulk of the money in a savings account or a certificate of deposit, you can at least earn some interest on it to counteract inflation."
RichVintage / Getty Images

RichVintage / Getty Images

Consider Opening a Separate Savings Account To Serve as a National Emergency Fund​

While it's smart to have up to $2,000 in cash in case of a bank shutdown, the rest of your emergency fund should be kept in a bank. Depositing your savings into an interest-bearing checking account or high-yield savings account can help multiply your savings over time.
"When you set aside savings -- whether for a vacation or for life's emergencies -- you want to be able to get to it quickly but not keep it somewhere that's too easy to access," said Chris Hogan, author, financial expert and host of The Chris Hogan Show. "Your money is safe inside a bank. Bank deposits are insured by the FDIC and are protected up to at least $250,000. The best place for your emergency fund is a money market account or savings account. If you want to keep some cash at home, that's fine, but I don't recommend cashing out your savings."
Find Out: 9 Bills You Should Never Put on Autopay
suteishi / Getty Images/iStockphoto

suteishi / Getty Images/iStockphoto

Consider Having Some Cash Saved in the Form of Alternative Assets​

"Cash is still king across all kinds of crises. Therefore, you want to ensure you have an amount on hand to help you in case it's necessary for purchasing some necessities," said Jason Powell, real estate and securities attorney at EstateInvesting.com. "However, you may also want to look into trading some of the cash you have for silver, gold and other assets that may be valuable in the coming year or near future."
welcomia / iStock.com

welcomia / iStock.com

How To Hide Money at Home​

Many people are reluctant to keep large amounts of money in their homes for fear of theft or misplacement. Keeping cash at home is risky, especially when it's in large denominations. A home break-in is the type of emergency you won't have money for if your cash supply is stolen -- physical money isn't insured and it's unlikely to be recovered. Finding secure and clever places to hide your emergency fund can safeguard the security of your assets; think of it as making a bank within your home.
Common advice is to keep some cash at your house, but not too much. The $1,000 cash fund Prakash recommended for having at home should be kept in small denominations.
"Favor smaller bills like twenties because some retailers won't accept larger notes," she said.
However, when looking to store your money in a compact fashion, larger bills in fewer quantities take up less space -- so it's up to your discretion. Whatever you decide, stash your cash away in a practical, yet unorthodox way.
"If you're going to have cash at home, make sure it's in a quality, fireproof safe," Hogan said. "This is more secure than the usual suspects -- under the mattress or the coffee container! Be reasonable with how much you put in the safe. It's OK to keep a couple thousand at home, but I want you to keep the bulk of your money secure and protected in a bank."
Tom Merton / Getty Images

Tom Merton / Getty Images

Other Options for Hiding Your Cash Stash​

More options for hiding your emergency cash funds include:
  • A bottle of aspirin in your medicine cabinet
  • A hollowed-out book
  • Between the cardboard backing of a framed picture and the photo itself
  • Encased in weatherproof material and buried in your backyard or the soil of a potted plant
  • Enclosed in a plastic sandwich bag and hidden in the freezer among frozen foods
Alihan Usullu / Getty Images/iStockphoto

Alihan Usullu / Getty Images/iStockphoto

Why It's a Good Idea To Have Cash on Hand During an Emergency​

Cash can be your biggest protection against a national emergency or disaster if circumstances prevent you from withdrawing cash from the bank. It's kind of like insurance -- you pay for it hoping you will never need it. The suggested hiding places should keep your money safe just in case that emergency should unexpectedly pop up.
Brothers91 / Getty Images

Brothers91 / Getty Images

What To Do Right Now If You Don't Have a National Emergency Fund​

For some people, this advice is coming a little too late. Many have already lost their jobs and are in a place where they are struggling to pay for necessary expenses. If this is the case for you and you don't have a national emergency fund, it's important to know how to best prioritize your spending.
"The expenses that should be your priority right now are the things you need to survive," Cruze said. "Whatever money or income you have should be dedicated to paying for what I call the 'four walls.' This is your food, utilities, housing and transportation. If you're struggling to put food on the table, cut anything that is not essential like subscriptions or cable. Right now, needs come first. But crisis or no crisis, do not use debt to cover emergencies! Debt will only add to your problems. If you've lost your job, find extra ways to earn cash. Amazon is hiring 100,000 people. Food delivery services, grocery shopping services, grocery stores and online learning are all industries that are in need of help right now."
YakobchukOlena / Getty Images/iStockphoto

YakobchukOlena / Getty Images/iStockphoto

Talk to Your Lenders​

If you have outstanding debts that you are now unable to pay because of job loss or a reduction in hours, and you don't have an emergency fund to help fill in these gaps, call your lenders directly. The last thing you want to have to worry about is penalties and fees for missed or late payments on top of your other financial strains.
"Call lenders and ask them if they'll let you miss payments without penalty," Cruze said. "Lots of companies are giving grace periods. The President just suspended student loan payments for 60 days. Take advantage of these things if you're struggling and save all the cash you can."
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Gabrielle Olya, Paul Sisolak and Ruth Sarreal contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: Here’s How Much Cash You Need Stashed if a National Emergency Happens
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What To Do Right Now If You Don't Have a National Emergency Fund ?​

Hope Mom and Dad can help.
 

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$2k won't even cover a weekend of hookers and blow. Then add a national emergency + beer and you're talking $5k easy.

^^he makes some valid points!

In all seriousness, I am shocked at how many people don't have this. One of my co-workers and I were talking about this a few months ago. I know what she makes and she told me what her husband makes. Between the two of them they gross around $125k-ish a year. She told me they are nowhere near having $2k saved up for an emergency fund. She then goes on to complain how her husband goes out golfing multiple times a week during spring/summer/fall and eats out for lunch. She said she is going to start ruling with an iron fist with his expenditures. A few days later, she tells me how they went out for dinner and movies one night, three nights later went out for dinner again, and then they went out for dinner once again two nights later. And she goes out and gets her nails done and hair done constantly. Yet, she can't figure out why they have so little savings. I gave her crap about her being upset with her hubby and then wasting money herself. Oh man, did she get defensive. The saying of you can't fix stupid really applies here.
 

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^^he makes some valid points!

In all seriousness, I am shocked at how many people don't have this. One of my co-workers and I were talking about this a few months ago. I know what she makes and she told me what her husband makes. Between the two of them they gross around $125k-ish a year. She told me they are nowhere near having $2k saved up for an emergency fund. She then goes on to complain how her husband goes out golfing multiple times a week during spring/summer/fall and eats out for lunch. She said she is going to start ruling with an iron fist with his expenditures. A few days later, she tells me how they went out for dinner and movies one night, three nights later went out for dinner again, and then they went out for dinner once again two nights later. And she goes out and gets her nails done and hair done constantly. Yet, she can't figure out why they have so little savings. I gave her crap about her being upset with her hubby and then wasting money herself. Oh man, did she get defensive. The saying of you can't fix stupid really applies here.
Typical American who prioritizes their comfort and pleasure over basic common sense regarding living within their means. Those are the people who will perish first while whining the loudest.
 

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^^he makes some valid points!

In all seriousness, I am shocked at how many people don't have this. One of my co-workers and I were talking about this a few months ago. I know what she makes and she told me what her husband makes. Between the two of them they gross around $125k-ish a year. She told me they are nowhere near having $2k saved up for an emergency fund. She then goes on to complain how her husband goes out golfing multiple times a week during spring/summer/fall and eats out for lunch. She said she is going to start ruling with an iron fist with his expenditures. A few days later, she tells me how they went out for dinner and movies one night, three nights later went out for dinner again, and then they went out for dinner once again two nights later. And she goes out and gets her nails done and hair done constantly. Yet, she can't figure out why they have so little savings. I gave her crap about her being upset with her hubby and then wasting money herself. Oh man, did she get defensive. The saying of you can't fix stupid really applies here.

My wife works with someone similar. Between her and her husband they make over $200k but have $250k+ in student debt. They voted for Biden thinking their student debt would be forgiven, they are pissed that it hasn’t been. They could easily pay their debt down in no time but choose to spend their money elsewhere; concerts, trips to disney, eating out, designer everything, new car every other year. And they want the rest of us to foot their student loan bill, infuriating…. They do work hard, but they live way over their means, and have no savings!!
 

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Typical American who prioritizes their comfort and pleasure over basic common sense regarding living within their means. Those are the people who will perish first while whining the loudest.

At first, I was quite annoyed with her stupidity but then I learned to laugh about it knowing it's not my problem. She made it sound like I was telling her they should never go out or do things like getting nails/hair done. I told her that wasn't the case at all but to think about cutting back on the frequency if she wants to build up their savings and eventually buy a house. She got even more upset so at that point I would just laugh to myself over her utter ignorance.
 

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My wife works with someone similar. Between her and her husband they make over $200k but have $250k+ in student debt. They voted for Biden thinking their student debt would be forgiven, they are pissed that it hasn’t been. They could easily pay their debt down in no time but choose to spend their money elsewhere; concerts, trips to disney, eating out, designer everything, new car every other year. And they want the rest of us to foot their student loan bill, infuriating…. They do work hard, but they live way over their means, and have no savings!!
Many, many such cases!!
 

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My wife works with someone similar. Between her and her husband they make over $200k but have $250k+ in student debt. They voted for Biden thinking their student debt would be forgiven, they are pissed that it hasn’t been. They could easily pay their debt down in no time but choose to spend their money elsewhere; concerts, trips to disney, eating out, designer everything, new car every other year. And they want the rest of us to foot their student loan bill, infuriating…. They do work hard, but they live way over their means, and have no savings!!

For some reason, I couldn't help but to laugh out loud over this. It's so ridiculous. Another one I know of is a friend of mine who is in his late 30s. He whines about barely getting by. Granted, his job doesn't pay that much ($18-$19/hour), but he is doing absolutely nothing to better his situation. He compounds it by ordering pizza for delivery or take out multiple times a week. He also refuses to get a 2nd job as playing Dungeons and Dragons online and streaming tv shows in his free time are much more important. I tried to tell him the impact that working a 2nd job at 10-15 hours a week could have on his situation, but he's lazy as hell. Also told him to consider how much he is spending dining out versus cooking his own food. That seemed to work for a bit, but he fell back into his bad habits (due to being lazy).
 

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For some reason, I couldn't help but to laugh out loud over this. It's so ridiculous. Another one I know of is a friend of mine who is in his late 30s. He whines about barely getting by. Granted, his job doesn't pay that much ($18-$19/hour), but he is doing absolutely nothing to better his situation. He compounds it by ordering pizza for delivery or take out multiple times a week. He also refuses to get a 2nd job as playing Dungeons and Dragons online and streaming tv shows in his free time are much more important. I tried to tell him the impact that working a 2nd job at 10-15 hours a week could have on his situation, but he's lazy as hell. Also told him to consider how much he is spending dining out versus cooking his own food. That seemed to work for a bit, but he fell back into his bad habits (due to being lazy).
Only one job? Lazy donkey!!!

 

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Only one job? Lazy donkey!!!


Lol...I only have one job, but I work OT every day (he works a flat 40 hours if that) and in my free time I am out hustling (going to garage sales and thrift stores and reselling items I found). I spend a lot of time researching values of items so I can spot a good deal when it's there. I am not getting rich off it by any means, but it's adding funds that I can use towards Ag, preps, ammo, or just throw into savings.
 

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Nice snowstorm, power out, online down, catalytic converter failed, chump change.
Without question, one should be calculating amount needed... then doubling that number.
If not triple.
1 - 2k is 1985 type spare cash talk.
When gas was below a buck and grocery store visit was $20.

We all know better.
 

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Nice snowstorm, power out, online down, catalytic converter failed, chump change.
Without question, one should be calculating amount needed... then doubling that number.
If not triple.
1 - 2k is 1985 type spare cash talk.
When gas was below a buck and grocery store visit was $20.

We all know better.

Yep, it's a good starting point that so many aren't anywhere near today. From there, they should add to it in terms of a minimum of 3-6 months of actual living expenses IMO.
 
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They lost me here.

Should Your National Emergency Fund Be All Cash?​

If you've managed to save up $15,000 in emergency funds over time, for example, it might not be a prudent idea to have all that money in cold hard cash sitting around your house. For one reason, it's unsafe, and two, it might actually be more than you need.
"There is a price to putting away a large amount of money for a rainy day: That price is inflation, which has averaged about 1 to 2% per year in the last few years," Prakash said. "To minimize loss from inflation, it's wise to not keep too much of your emergency fund at home in physical cash. By keeping the bulk of the money in a savings account or a certificate of deposit, you can at least earn some interest on it to counteract inflation."
Obviously these journo-morons don't save, don't pay attention to prices as they spend, and can't add.

Savings accounts pay less than one percent, now. Not NEARLY worth the hassle of dealing with Know-Your-Customer, suspicious tellers, We-Don't-Have-That-Much-Cash, five-day holds on deposited checks, etc., etc.

YES, cash. Cash is a poor substitute for real money (we know what that is) but better in hand than in the bank.

I typically kept around $1500 in my safe, or hole in the back yard. Right now I'm low, but looking for ways to build it back up, hopefully without selling more of my stack.
 

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used to be, one job per family was all that was required, a house, a car, a tv AND a Savings Account could all be achieved from that one job

now it's a side hack, a gig job...it's everything but a second / third job


so, by now, we know the answer:
What's it feel like to be a slave?
 

Casey Jones

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used to be, one job per family was all that was required, a house, a car, a tv AND a Savings Account could all be achieved from that one job

now it's a side hack, a gig job...it's everything but a second / third job


so, by now, we know the answer:
What's it feel like to be a slave?
That takes a long explanation.

It's the Free Market at work.

Indoctrinate the wombynz that motherhood is "demeaning" and what they need is a **CAREER**...and out they trot, into the workforce.

Increase the workforce by 70 percent, with a static number of available jobs...that is, the supply of labor is increased, but the demand for labor remains constant...what happens? What always happens. The price of labor drops.

Now, this (initial) increased household income (before prices of labor reflect it all) results in SOME increase in demand for consumables. As well as some increase for upscale goods such as housing, automobiles. And some new demands - child care, convenience foods, time-saving appliances.

So it's not a clear-cut drop in the price of labor. It IS a radical upheaval; and the labor market reflects the added supply...with downward (stagnant, in an inflationary economy) prices.

There are only two ways out of this. Either societal collapse which makes labor-saving devices unaffordable, and child-care dangerous...so the wombynz stay at home, doing homey things...or else, some sort of social-legal DEMAND that they do.

Such as a takeover of Radical Islam.

Nothing else is gonna change this. But the good news is, we're well on our way to societal collapse.
 

Buck

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It's the Free Market at work.
it hasn't been free in decades...the formulas, the advice, the fear mongering, the never-ending tax increases, the manipulation of corporate and stock market values

that's what takes the longest to explain, but let's face it: They Built It, specifically for US then transferred it around the globe


we didn't have to play their game...but we did, damn near all of us played at some point, not all of us achieved what they promised us we would get if we 'worked harder', then we moved to 'work smarter', and that one alluded to what they think of us: We're Stupid
 

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it hasn't been free in decades..

And what you're seeing is the Free Market - that is, market forces - responding to manipulation.

The Free Market is not a legal state. It's not a declaration - "We have Free Markets." It's natural, immutable economic forces and trends, that cannot be stopped.

Really smart people like Marx and Keynes and Professor Stephanie Kelton (MMT) come in and say, the market is UNFAIR, and we're going to fix it, with laws, and money-printing, and taxes, and seizures of property. And free-market forces respond. The Dow blows a bubble. Money pours into subsidized industries. People with assets, LEAVE the Utopia the Elites craft.

Free-market forces are always at work, because human nature doesn't switch off on command by Elites.
 

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In a national emergency it's not money your going to need but a way to defend yourself and family.
 

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For years I kept about 50k cash around.....mainly to buy and sell farm and construction equipment...it was easier than trying to move cash in and out of a bank on a regular basis and becoming a gov scrutiny target.....I have much less now but more off books equipment on hand but flowing money and assets around doesn't require a bank and scrutiny....in my opinion it's good to have cash available anytime for many reasons....its not like the bank actually pays interest these days....banks do have a purpose but people give them far to much power in their lives in my opinion
 

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For years I kept about 50k cash around.....mainly to buy and sell farm and construction equipment...it was easier than trying to move cash in and out of a bank on a regular basis and becoming a gov scrutiny target.....I have much less now but more off books equipment on hand but flowing money and assets around doesn't require a bank and scrutiny....in my opinion it's good to have cash available anytime for many reasons....its not like the bank actually pays interest these days....banks do have a purpose but people give them far to much power in their lives in my opinion

Having it home gives you 24/7 access without the 3rd degree and no worries about your digital dollars getting hacked or some other nefarious situation happening where you can't access your money. If you don't hold it, you don't own it.
 

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If worse comes to worse, its good to have some cash around. You can clean your ass with it.
 

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Having it home gives you 24/7 access without the 3rd degree and no worries about your digital dollars getting hacked or some other nefarious situation happening where you can't access your money. If you don't hold it, you don't own it.

very true......and people fret about security........what i think they miss is your life is worth more than cash and your life is not in the bank ......the only real issue i guard against in holding cash is storm and fire protection and obviously you dont leave it on the kitchen table or your sock drawer
 

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Cash is great....until inflation goes hyper and drives the value to near zero. That's my only hesitation with having a lot on hand.
 

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Here’s How Much Cash You Need Stashed if a National Emergency Happens​


Jaime Catmull
Tue, May 24, 2022, 10:32 AM


Julia Sudnitskaya / Shutterstock.com

Julia Sudnitskaya / Shutterstock.com
You've probably heard time and again that it's important to have a rainy day fund set up "just in case" something unexpected were to happen. But we're now at a time when having an emergency fund is more vital than ever.
See: 9 Best Small Business Ideas To Make Money From Home
Find: 7 Financial Habits That Improve Your Daily Life

The coronavirus pandemic was a prime example of how something unexpected can have devastating effects on the economy at large and on an individual level, too. While we all hope the worst of it is over, here's how to be prepared in case it's not -- plus how to set up a fund for unexpected future national emergencies.
mammuth / Getty Images/iStockphoto

mammuth / Getty Images/iStockphoto

Why You Need a National Emergency Fund​

Part of being prepared for any contingency, big or small, is having a reserve of emergency cash at your disposal at all times. When you can't rely on accessing your funds electronically, you'll need some legal tender to buy food, gas or other necessities.

"Whether it's Mother Nature or some other disaster out of your control, you always want to be prepared by having some emergency cash on hand," said Annalee Leonard, an investment advisor representative and president of Mainstay Financial Group. "Banks and ATMs may not be up and running for days after a strong storm. I recommend my clients have three to five days' worth of spending money, just in case."
stevanovicigor / Getty Images/iStockphoto

stevanovicigor / Getty Images/iStockphoto

How To Decide How Much To Save​

To decide how much to save for an emergency fund, you'll need to ask yourself a couple of questions:
  • How much will I need for an extreme catastrophic event?
  • How much can I afford to save?
"It's wise to have a small amount of physical cash at home for the truest of emergencies when banks are not operating," said Priyanka Prakash, managing editor at Fit Small Business, a company that finds the best small-business software, services and financing options.
Learn: 15 Ways To Make Money Fast
Shutterstock.com

Shutterstock.com

Aim To Save $2,000​

"Individuals should be prepared to pay for essential or non-discretionary expenses out-of-pocket," said Brett Tharp, CFP and financial planning education consultant at eMoney Advisor. "Temporary lodging or shelter, fuel, food, water and necessary medications fall into this category. This will differ for each person depending on their level of preparedness or perception of how likely a catastrophic event might be."
Two-thousand dollars should cover those costs.
"The rule of thumb I advise my clients is to keep $1,000 to $2,000 in cash in case banking operations are shut down due to a national emergency or catastrophe," said Gregory Brinkman, president of Brinkman Financial in Tulsa, Oklahoma.
RichVintage / Getty Images/iStockphoto

RichVintage / Getty Images/iStockphoto

There's No 'Magic Number' for How Much To Save in Your Emergency Fund​

Despite these suggestions and what some other experts might advise, though, there's no magic amount you should have nestled away in your emergency fund. The answer for how much you should save for an emergency situation is that you should do what feels right to you. No matter the amount, an emergency fund is absolutely necessary -- so make it a priority to build one.
Even if you can't afford to save much, it's better to save something rather than nothing, Prakash said. So if you can only afford to set aside $1,000 for an emergency fund, that's better than not saving at all.
Shutterstock.com

Shutterstock.com

The Cost of Covering Necessities​

Take into account that in a national emergency, inflation will rise, demand for necessities will increase and price gouging will likely ensue. With all that in mind, in addition to your regular emergency savings, you should prepare to have enough to cover the following costs in a national emergency situation:
Water -- 10 gallons$28
Gas -- 20 gallons$84
Portable solar generator$130
Battery-powered lights$20
Emergency solar hand-crank radio$20
Prices for gas and water will likely be much higher in the event of an actual national state of emergency. Note that the items in the table are emergency purchases for one person.
Shutterstock.com

Shutterstock.com

The Cost of an Emergency Kit​

You should already have some kind of emergency kit that includes these recommendations from Money.com:
  • Batteries and tools: $122
  • First aid supply kit: $48
  • Nonperishable food: $120
  • Medication: $38
  • Spare clothing: $44
Kyryl Gorlov / Getty Images/iStockphoto

Kyryl Gorlov / Getty Images/iStockphoto

How Is a National Emergency Fund Different From Other Savings?​

Unlike a regular emergency fund -- which should be used to cover things like unemployment, medical or car emergencies, emergency home repairs or bereavement-related expenses -- a national emergency fund should be reserved for catastrophes in which you cannot use credit cards.
Regular emergency savings should be stashed in some kind of savings, money market or certificate of deposit account. Your savings for a national emergency fund should be kept mostly in cash.
"Avoid the stock market because you can lose (your national emergency money) right when you need it the most," Prakash said.
Neither type of emergency fund is meant to be dipped into or spent like disposable income, and creating one takes the same approach as that for a rainy-day fund, a nest egg or any other savings.
RichVintage / Getty Images

RichVintage / Getty Images

How To Start an Emergency Fund​

The first step in saving for a national emergency fund is creating a budget, said Rachel Cruze, author and host of The Rachel Cruze Show and The Rachel Cruze Show podcast.
"A zero-based budget is best," she said. "This is where your income minus expenses equals zero, so you are giving every dollar a name. Even if your income has changed or you've lost your job, list out any possible income you could have coming in and all your expenses. This will help you to see what can be cut from your budget so you can stretch your money further and find ways to save."
Good To Know: How Much Money You Should Keep in Each Type of Banking Account?
Jacob Ammentorp Lund / Getty Images/iStockphoto

Jacob Ammentorp Lund / Getty Images/iStockphoto

Set Savings Goals​

Once you set your budget and see how much money you can realistically dedicate toward savings, it's time to start setting some goals. Financial author Dave Ramsey and many other experts suggest starting small. If you're looking to set aside $3,000 in one year, that would mean you'll have to save $250 per month over the next 12 months. Extend your savings goal to 18 months, and that's $166 per month.
Or you can automate saving a percentage of your income. "Put aside about 10% of your monthly take-home income for your emergency fund," Prakash said.
anandaBGD / Getty Images

anandaBGD / Getty Images

Make Saving for Your Emergency Fund a Priority​

It's especially vital right now to focus on saving, with job insecurity at a high and stock values plummeting.
"It's important to not panic but to be proactive in planning your finances over the next few months, considering different strategies for saving more money and having cash on hand," said Chalmers Brown, CTO and co-founder of Due. "I recommend doing a review of your new budget, considering your current job situation as well as accounting for reductions in spending. For example, since you are quarantined, you are most likely spending considerably less on gas, eating out and entertainment. Take that money out of your bank that you would have spent and put it in a lockbox as cash."
Geber86 / Getty Images

Geber86 / Getty Images

Put Other Contributions on Hold While You Build Your Emergency Fund​

When you're in the process of building your emergency fund, limit other saving contributions or debt repayments to only the necessary amount, Tharp said.
"For example, contribute enough to your company's 401(k) to get the full company match and allocate the additional funds to your emergency savings," he said. "Additionally, maintain the minimum payments on outstanding debt to keep loan balances steady while directing additional money toward your emergency fund. Once you've built up enough savings, you can continue to contribute money to other longer-term goals."
kali9 / iStock.com

kali9 / iStock.com

Should Your National Emergency Fund Be All Cash?​

If you've managed to save up $15,000 in emergency funds over time, for example, it might not be a prudent idea to have all that money in cold hard cash sitting around your house. For one reason, it's unsafe, and two, it might actually be more than you need.
"There is a price to putting away a large amount of money for a rainy day: That price is inflation, which has averaged about 1 to 2% per year in the last few years," Prakash said. "To minimize loss from inflation, it's wise to not keep too much of your emergency fund at home in physical cash. By keeping the bulk of the money in a savings account or a certificate of deposit, you can at least earn some interest on it to counteract inflation."
RichVintage / Getty Images

RichVintage / Getty Images

Consider Opening a Separate Savings Account To Serve as a National Emergency Fund​

While it's smart to have up to $2,000 in cash in case of a bank shutdown, the rest of your emergency fund should be kept in a bank. Depositing your savings into an interest-bearing checking account or high-yield savings account can help multiply your savings over time.
"When you set aside savings -- whether for a vacation or for life's emergencies -- you want to be able to get to it quickly but not keep it somewhere that's too easy to access," said Chris Hogan, author, financial expert and host of The Chris Hogan Show. "Your money is safe inside a bank. Bank deposits are insured by the FDIC and are protected up to at least $250,000. The best place for your emergency fund is a money market account or savings account. If you want to keep some cash at home, that's fine, but I don't recommend cashing out your savings."
Find Out: 9 Bills You Should Never Put on Autopay
suteishi / Getty Images/iStockphoto

suteishi / Getty Images/iStockphoto

Consider Having Some Cash Saved in the Form of Alternative Assets​

"Cash is still king across all kinds of crises. Therefore, you want to ensure you have an amount on hand to help you in case it's necessary for purchasing some necessities," said Jason Powell, real estate and securities attorney at EstateInvesting.com. "However, you may also want to look into trading some of the cash you have for silver, gold and other assets that may be valuable in the coming year or near future."
welcomia / iStock.com

welcomia / iStock.com

How To Hide Money at Home​

Many people are reluctant to keep large amounts of money in their homes for fear of theft or misplacement. Keeping cash at home is risky, especially when it's in large denominations. A home break-in is the type of emergency you won't have money for if your cash supply is stolen -- physical money isn't insured and it's unlikely to be recovered. Finding secure and clever places to hide your emergency fund can safeguard the security of your assets; think of it as making a bank within your home.
Common advice is to keep some cash at your house, but not too much. The $1,000 cash fund Prakash recommended for having at home should be kept in small denominations.
"Favor smaller bills like twenties because some retailers won't accept larger notes," she said.
However, when looking to store your money in a compact fashion, larger bills in fewer quantities take up less space -- so it's up to your discretion. Whatever you decide, stash your cash away in a practical, yet unorthodox way.
"If you're going to have cash at home, make sure it's in a quality, fireproof safe," Hogan said. "This is more secure than the usual suspects -- under the mattress or the coffee container! Be reasonable with how much you put in the safe. It's OK to keep a couple thousand at home, but I want you to keep the bulk of your money secure and protected in a bank."
Tom Merton / Getty Images

Tom Merton / Getty Images

Other Options for Hiding Your Cash Stash​

More options for hiding your emergency cash funds include:
  • A bottle of aspirin in your medicine cabinet
  • A hollowed-out book
  • Between the cardboard backing of a framed picture and the photo itself
  • Encased in weatherproof material and buried in your backyard or the soil of a potted plant
  • Enclosed in a plastic sandwich bag and hidden in the freezer among frozen foods
Alihan Usullu / Getty Images/iStockphoto

Alihan Usullu / Getty Images/iStockphoto

Why It's a Good Idea To Have Cash on Hand During an Emergency​

Cash can be your biggest protection against a national emergency or disaster if circumstances prevent you from withdrawing cash from the bank. It's kind of like insurance -- you pay for it hoping you will never need it. The suggested hiding places should keep your money safe just in case that emergency should unexpectedly pop up.
Brothers91 / Getty Images

Brothers91 / Getty Images

What To Do Right Now If You Don't Have a National Emergency Fund​

For some people, this advice is coming a little too late. Many have already lost their jobs and are in a place where they are struggling to pay for necessary expenses. If this is the case for you and you don't have a national emergency fund, it's important to know how to best prioritize your spending.
"The expenses that should be your priority right now are the things you need to survive," Cruze said. "Whatever money or income you have should be dedicated to paying for what I call the 'four walls.' This is your food, utilities, housing and transportation. If you're struggling to put food on the table, cut anything that is not essential like subscriptions or cable. Right now, needs come first. But crisis or no crisis, do not use debt to cover emergencies! Debt will only add to your problems. If you've lost your job, find extra ways to earn cash. Amazon is hiring 100,000 people. Food delivery services, grocery shopping services, grocery stores and online learning are all industries that are in need of help right now."
YakobchukOlena / Getty Images/iStockphoto

YakobchukOlena / Getty Images/iStockphoto

Talk to Your Lenders​

If you have outstanding debts that you are now unable to pay because of job loss or a reduction in hours, and you don't have an emergency fund to help fill in these gaps, call your lenders directly. The last thing you want to have to worry about is penalties and fees for missed or late payments on top of your other financial strains.
"Call lenders and ask them if they'll let you miss payments without penalty," Cruze said. "Lots of companies are giving grace periods. The President just suspended student loan payments for 60 days. Take advantage of these things if you're struggling and save all the cash you can."
More From GOBankingRates
Gabrielle Olya, Paul Sisolak and Ruth Sarreal contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: Here’s How Much Cash You Need Stashed if a National Emergency Happens
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Great advice for teenagers ;)
 

ttazzman

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Cash is great....until inflation goes hyper and drives the value to near zero. That's my only hesitation with having a lot on hand.

Inflation attacks all forms of cash no matter the location....
 

newmisty

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"

What To Do Right Now If You Don't Have a National Emergency Fund ?​

Scream & pout until the government says, "Dat's ok, we'll take care of you."
 

viking

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very true......and people fret about security........what i think they miss is your life is worth more than cash and your life is not in the bank ......the only real issue i guard against in holding cash is storm and fire protection and obviously you dont leave it on the kitchen table or your sock drawer

Exactly, I keep all my valuables not on kitchen table nor with the socks, but in soiled underwear.
 

Casey Jones

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Pick more than one place.

Schitte happens. But it's not likely to happen to several places at once. You'll lose, if any of your locations are hit somehow, but you won't lose everything.

Just try to remember. I've been too clever by half, more than once.
 

Joe King

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A few days later, she tells me how they went out for dinner and movies one night, three nights later went out for dinner again, and then they went out for dinner once again two nights later. And she goes out and gets her nails done and hair done constantly. Yet, she can't figure out why they have so little savings. I gave her crap about her being upset wi
She's doing what is most important to her at this moment.
She complains about what her husband spends $$$ on because one, he's doing it with his buddies and not her, and two, because in her eyes golfing and eating lunch with his buddies simply does not rise to the level of importance as does her getting to go out to eat and getting her nails done.
Ie: in her mind, any savings need to come from him cutting back on his needless activities, as opposed to the "important" stuff she does.

She also obviously has a strong normalcy bias, and if even half of the worst predictions come to pass, her and her hubbie will be blindsided and get stuck in a panic loop with no clue as to what to do.
 

southfork

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I'm thinking two to three billion might be a good amount to aim for :gold:
I find myself a tad short at this juncture in time, could you spare a m or two my friend?
 

Fatboy

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Cash is great....until inflation goes hyper and drives the value to near zero. That's my only hesitation with having a lot on hand.
Along with fire, natural disasters and physical theft (not through inflation), another concern might be a total reset of the currency where the .Gov would issue new/improved bills due to forgeries and black market activity. I have read here about other countries that have done this and the "normal person" could only trade X amount of old currency for new currency daily. If one had stacks of bundles of $100 bills, one could be left holding them.
 

the_shootist

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Along with fire, natural disasters and physical theft (not through inflation), another concern might be a total reset of the currency where the .Gov would issue new/improved bills due to forgeries and black market activity. I have read here about other countries that have done this and the "normal person" could only trade X amount of old currency for new currency daily. If one had stacks of bundles of $100 bills, one could be left holding them.
That's when the guns come out. I'll bet that other countries that have done this in the past didn't have an armed civilian army such is like the American people.

This is why they want the guns so badly