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Ask Dave

Emergency fund in a safe?

Keep part of your emergency fund in cash at home in a safe? Dave answers Will's question, and he offers a little advice.

QUESTION: Will and his wife are completely debt-free. They want to keep a portion of their emergency fund in cash at home in a safe. Dave doesn’t mind the idea, but he stresses caution and reason.

ANSWER: Typically, homeowners insurance policies have a limit as to how much cash they will cover. I’d advise re-reading your policy, and double checking with your insurance agent just to be sure. When it comes to documenting valuables, I’d suggest making a video or taking photographs.

When it comes to the portion of your emergency fund you keep at home, I’d recommend just being reasonable. If you’ve got $10,000 set aside for emergencies, I’m okay with you keeping $5,000 at home in a quality, fireproof safe. I wouldn’t put all, or even most of it, in a safe, though. I certainly wouldn’t keep some huge amount like $200,000 at home in a safe.

Again, just make sure your homeowners policy covers it, and make sure, too, you’ve got a really good safe.