Financial advisors encourage saving an emergency fund to cover unexpected expenses and typically encourage banking the savings in an interest-bearing account.
“That’s sound advice, yet having cash available is also a must,” says Carol Young, Kansas State University Research and Extension financial management specialist.
Imagine, for example, if the neighborhood bank is in the path of a tornado or flood and is damaged, destroyed or without the electrical power needed to access electronic records, operate ATMs or complete a credit card transaction, she says.
Cash needed in emergency; tuck in emergency kit
“With cash in hand, victims in such circumstances will be better able to cover immediate expenses, such as food, water, shelter, medications, gas, rental car or other transportation in an emergency,” Young adds.
The amount needed will depend on the number of members in the household, any special needs, the amount you feel comfortable possibly losing, and the severity of the emergency, she said.
A few hundred dollars could be enough to bridge the gap, says Young, who advised tucking the cash into a water- and fireproof emergency kit with medications, copies of insurance policies and other essential records (identification, health records and insurance cards, a recent bank/investment statement, family and business contact numbers and address book). The kit can be taken to a storm or emergency shelter along with a battery-powered radio, non-perishable foods and so on..
Much of the family and business contact information such as names, addresses, phone numbers, financial account numbers, or scanned copies of documents can be saved electronically to a portable flash drive or a web document account and updated as needed, she suggests.
Including passwords on the flash drive is not recommended.
Source: Kansas State University