People often wonder where the best place is to keep their emergency fund. It’s frustrating to sock 3 months’ worth of expenses into a low-interest savings account. However, a stock or bond investment can lose money at any time. When your emergency happens, your fund could be lower than last week or last month.
When I was a little, my parents had an old mayonnaise jar full of change in their closet. Of course, this is where my dad would empty out his pockets, but I thought that was our family’s life savings. If there ever was a fire, I hoped they remembered to grab that jar on the way out so we could afford to rebuild the house. I also worried about burglary. This memory takes place in a house we lived in when I was in pre-school, so apparently, I’ve always been thinking about money.
So, what should you do?
While a mayo jar or stock mutual fund are not the best places to store emergency cash, there are worse options. You may remember the recent news story about a Georgia woman who donated a travel coffee mug to Goodwill. Reasonable – I do it all the time. Those things pile up. Unfortunately, her son had put $6,500 in cash in that mug from selling a car.
A Denver Woman stored her $35,000 savings in a Ziploc in her freezer. She has a medical condition that makes it difficult to get to the bank. When the Costco subcontractor came to swap out her old refrigerator for a new one, there was some confusion as to whether she or her daughter would retrieve the money (but I’m guessing the ice cream got moved). Anyway, you guessed it, when Denver Woman called Costco to ask about the money, it could not be found. She blames Costco for not screening its contractors properly.
There is an oft repeated story about how Molly Brown put the cash from a silver strike in a fireplace for safekeeping and her husband JJ burned it up in a practical effort to warm the house. This, like many other stories about Margaret Brown (even her name is a myth), is untrue. They didn’t keep paper money in the mining camps at the time, only coins.
So, while a savings account is a boring place to keep an emergency fund, turns out it is the best.