Canadians are turning to cash as a financial security blanket in these trying times. Lots of cash.
An informal survey conducted through my Carrick on Money e-newsletter asked people if they keep money at home, not including what’s in their wallet or box. Just over 51 percent of the 6,642 people who filled out the survey anonymously in midweek said yes, and the average amount of cash on hand was $5,069.
The most cited purpose behind having cash at home is for emergencies and convenience. But many survey participants offered reasons that reflect a hunger for security in an increasingly uncertain and threatening world.
Seventy-six people mentioned the war as a reason for having cash, one of whom said they had saved $2,000 “since the war in Ukraine”. Nearly 100 people cited COVID-19: “I am more aware of the need to be prepared since the pandemic,” one newsletter reader wrote.
Fear of power outages that knock out ATMs and electronic banking was another popular reason to keep cash at home. Phrases that appeared repeatedly when people explained their reasons for having cash on hand: civil unrest, cyberattacks, earthquakes, crises, catastrophes, and Armageddon.
Five people specifically mentioned Vladimir Putin and 41 mentioned Russia. Several people linked their cash holdings to the federal government’s response to trucker blockades last winter by invoking the Emergencies Law, which grants the power to freeze bank accounts.
Cash holdings also reflect the continued existence of an underground economy where people pay for services under the table. “I have been doing some renovations and need to pay some contractors cash,” one survey participant wrote. Another said they are saving $10,000 for unexpected home renovations.
A total of 3,104 people specified how much cash they keep at home, the vast majority of them with less than $50,000. In this group, the median cash amount was $2,675. The overall average of $5,069 reflects the statistical impact of people who have six-figure amounts.
It’s interesting how people organize their cash: One survey participant has $200 in $5 bills, another has $100 in coins, and another said $1,500 in small bills “and a lot of wackos and toonies.” The emphasis on small bills makes sense: having someone break $50 in the middle of civil unrest, cyberattacks, earthquakes, crises, catastrophes, or Armageddon could be a problem.
The vast majority of cash accumulated at home is in Canadian dollars, but US dollar holdings are also common. Other currencies mentioned included euros, British pounds, Hong Kong dollars and Mexican pesos, with some people saying their household holdings went beyond cash to include gold and silver bars, ingots or wafers.
The interest in keeping cash at home contrasts with what happened in the broader economy during the pandemic. Payments Canada’s 2021 Canadian Payment Methods and Trends report showed that the number of cash transactions fell 16.5 percent in 2020 from the previous year. ATM use fell 9.2 percent in the number of transactions, while the number of personal checks fell nearly 28 percent in volume.
Two notable ways people are replacing cash: contactless debit payments and wire transfers, which are up 35% and 48%, respectively, in volume from 2019 levels. Just over a A third of people surveyed said they did not expect to return to using cash at pre-pandemic levels.
The cliché about having cash at home is that it’s something you’re biased to do if you or your family lived through the Depression, or if you or your family lived in a country with a history of unrest, war, or invasion.
But hundreds of people in the newsletter’s survey indicated that they have started to accumulate cash in the last two years. Even as online banking takes care of everyday expenses, people turn to cash for safety in times of stress.
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