I never used to keep more than $20 in cash at home, but now I'm keeping at least $600 on hand because of the pandemic (2024)

Our experts answer readers' investing questions and write unbiased product reviews (here's how we assess investing products). Paid non-client promotion: In some cases, we receive a commission from our partners. Our opinions are always our own.

• When the pandemic swept New York City, I hit full panic mode and wondered if I should start keeping more cash at home for emergencies. So I talked to a financial planner to see if this was a good idea.
• He said paying for daily expenses in cash could help me reduce my credit card spending, which was helpful since I'd been shopping onlinea lot in quarantine.
• He also said it would be smart to keep cash around in case another wave of COVID-19 infections in New York City prompts cash shortages, and in case of a major blackout during storm season.
• Sign up to get Personal Finance Insider's newsletter in your inbox »

I will always remember 2020 as the year I got serious about my finances. I started the year by creating strict budgets, putting aside cash for my retirement and emergency fund, and I even got into investing.

But once the pandemic arrived in March, my mindset toward my money was shaken up. As the world was put on pause and my income was cut significantly, I found myself in full panic mode.

One of the things I wondered was whether I should start keeping more cash on hand. What if the pandemic continued for a long time and ATMs ran out of money? (Unlikely, but like I said, I was in panic mode.) What if I relied too much on my credit cards and went into debt?

After talking to Colin Exelby, a financial planner and founder of Celestial Wealth Management, I decided to do something I've never done before: stock up on cash and store it in my apartment. Here are three reasons why.

Using cash helps control impulse spending

At the start of the pandemic, I found myself getting a little too cozy with online shopping as a nightly ritual. Even with stores closed, e-commerce websites never slept, and I spent more than I usually would buying things out of boredom. My budget was completely rocked because of my credit card spending and I wondered if I should put the cards away and turn to cash.

Exelby agreed with that approach.

"In my opinion, credit cards should only be used by those who pay them off each month or as an emergency line of credit," said Exelby. "If you have a history of charging and not being able to pay the balance off, credit cards should probably be avoided."

This advice was what made me turn to cash in the first place. I decided to pay for my daily expenses in cash, making it a goal to withdraw cash at the start of the month, portion it out into envelopes labeled for different needs (groceries, household items, etc.) and spend only that money.

My at-home emergency fund means I can cover my daily expenses no matter what

When the world paused in March, as the pandemic got worse and sheltering in place began, I realized that I didn't have more than $20 in cash at home. That made me wonder if stocking up on cash was a good idea in case another wave of COVID forces us back into lockdown and access to cash is limited.

Exelby said it is a good thing to do.

"Having an at-home emergency fund that is denominated in $20 bills and equal to roughly two to three weeks of living expenses (not rent/mortgage, which could be deferred) makes a lot of sense," said Exelby. "In a natural disaster like a hurricane or earthquake with a severe power outage, or a pandemic where access to cash becomes limited, those who have the cash have more optionality."

I decided to follow that advice and put enough cash for two weeks' worth of living expenses (around $600) into an envelope. I put it somewhere safe and secure in my apartment so that I didn't have to stress too much about it being found by anyone but me.

I can use cash if there's a major power outage

As we approached storm season on the east coast, I wondered if it would be a good idea to store a separate cash fund in my house for any potential power outages. I remember, growing up in Florida, when hurricanes would leave our city without power for weeks and stores would become cash-only. Even though so many stores now are cashless, when a storm hits, they might have to reverse that.

Exelby said that it could be good to prepare for something like that, so I decided to keep a separate cash fund in my apartment just for emergency storms or power outages with another $400 in it.