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Protect Your Cash
_We’ve been taught all of our lives that our savings should not go under the mattress or behind the walls. We’ve been taught that if we do that, our monies will be worth less after inflation. We’ve been taught that we never have to worry about losing our funds, because our banks are federally insured. Hmmm… we certainly have been taught a lot, haven’t we?
In times of economic crisis, it’s time to start re-recognizing the value of cash. Having it, spending it and certainly protecting it. Because when you have cash on hand, if the world is crashing down and the banks go out of business, your cash will keep you going for a little while – until that little piece of paper or coin becomes worthless, too.
Sounds pretty Grim Reaper-ish, doesn’t it? But it’s time to start paying attention to what’s going on with the world economy and taking the steps to protect ourselves. That happens when we protect our money.
A Quick Banking Lesson
When you think of your bank, do you see a gold money tree that consistently hands the banker gold coins to dole out to those that need them? Of course not. You see a building that houses the money you lend it, preferably securely. You picture your money sleeping soundly somewhere in a vault, so you can withdraw upon it when the time comes.
Well, although a bank would like you to think your money’s just lying around waiting for you, the truth is that it’s gallivanting all over town. Your bank is using your money to pay off its debts or loan to other people or invest or leverage.
The balance sheet at the bank is kept closely enough for the bank to know that, if you came in and closed your account, they’d be able to hand you the cash before you ever even knew it was missing. It’s a common, basic banking technique.
Banks only get into trouble when, suddenly, the balance sheet stops working. Too many people stop paying off money they owe to the bank in the form of car loans, mortgages or personal loans and suddenly, the money they thought they would have is suddenly missing.
If thousands of people caught wind of this, panicked and decided to close their accounts all on the same day… do you really think the bank would be able to service them? Maybe – but the likelihood is greater that all that cash would not be on hand.
Protect Yourself
That’s not to say you should run screaming and pull all your money out of your bank. For most banks, the government offers federal insurance to protect your cash. It’s your job to determine how much that insurance is and make certain it covers you. That said, it’s always a good idea to keep an extra amount on hand for emergencies.
After all, if you have to make a claim to get your cash at the same time everyone else is, it could be quite awhile until you see it.
In times of economic crisis, it’s time to start re-recognizing the value of cash. Having it, spending it and certainly protecting it. Because when you have cash on hand, if the world is crashing down and the banks go out of business, your cash will keep you going for a little while – until that little piece of paper or coin becomes worthless, too.
Sounds pretty Grim Reaper-ish, doesn’t it? But it’s time to start paying attention to what’s going on with the world economy and taking the steps to protect ourselves. That happens when we protect our money.
A Quick Banking Lesson
When you think of your bank, do you see a gold money tree that consistently hands the banker gold coins to dole out to those that need them? Of course not. You see a building that houses the money you lend it, preferably securely. You picture your money sleeping soundly somewhere in a vault, so you can withdraw upon it when the time comes.
Well, although a bank would like you to think your money’s just lying around waiting for you, the truth is that it’s gallivanting all over town. Your bank is using your money to pay off its debts or loan to other people or invest or leverage.
The balance sheet at the bank is kept closely enough for the bank to know that, if you came in and closed your account, they’d be able to hand you the cash before you ever even knew it was missing. It’s a common, basic banking technique.
Banks only get into trouble when, suddenly, the balance sheet stops working. Too many people stop paying off money they owe to the bank in the form of car loans, mortgages or personal loans and suddenly, the money they thought they would have is suddenly missing.
If thousands of people caught wind of this, panicked and decided to close their accounts all on the same day… do you really think the bank would be able to service them? Maybe – but the likelihood is greater that all that cash would not be on hand.
Protect Yourself
That’s not to say you should run screaming and pull all your money out of your bank. For most banks, the government offers federal insurance to protect your cash. It’s your job to determine how much that insurance is and make certain it covers you. That said, it’s always a good idea to keep an extra amount on hand for emergencies.
After all, if you have to make a claim to get your cash at the same time everyone else is, it could be quite awhile until you see it.