Canadians are turning to cash as a financial security blanket in these troubled times. Piles of cash.
An informal survey conducted through my Carrick on Money e-mail newsletter asked people whether they keep money at home, not including what’s in their wallet or cash jar. Just over 51 per cent of the 6,642 people who anonymously completed the survey as of mid-week said they did, and the average amount of cash on hand was a hefty $5,069.
The most commonly cited purpose behind keeping 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 cited war as a reason for holding cash, one of whom said they put $2,000 away “just since the war in Ukraine.” Almost 100 people cited COVID-19: “I am more cognizant of the need to be prepared since the pandemic,” wrote one newsletter reader.
Fear of power outages that knock out ATMs and the electronic banking system was another popular reason for holding cash at home. Phrases that cropped up repeatedly as people explained their rationale for having cash at hand: civil unrest, cyber attack, earthquake, crisis, catastrophe and Armageddon.
Five people specifically mentioned Vladimir Putin and 41 mentioned Russia. Several people linked their cash holdings to the federal government responding to trucker blockades this past winter by invoking the Emergencies Act, which provides 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. “Have been doing some renos and need to pay some contractors in cash,” one survey participant wrote. Another said they keep $10,000 around 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 average cash amount was $2,675. The overall average of $5,069 reflects the statistical impact of people who hold six-figure amounts.
How people organize their cash is interesting – one survey participant holds $200 in $5 bills, another has $100 in coins and another said $1,500 in small-denomination bills “and lots of loonies and toonies.” The emphasis on small bills make sense – getting someone to break a $50 amid civil unrest, cyber attack, earthquake, crisis, catastrophe or Armageddon could be a problem.
The vast majority of cash stockpiled at home is in Canadian dollars, but U.S.-dollar holdings are common as well. Other currencies mentioned were euros, British pounds, Hong Kong dollars and Mexican pesos, and a few people said their at-home holdings went beyond cash to include gold and silver bars, ingots or wafers.
Interest in keeping cash at home contrasts with what happened in the broader economy during the pandemic. The 2021 Canadian Payment Methods and Trends report from Payments Canada showed the number of cash transactions fell by 16.5 per cent in 2020 from the previous year. ATM use was down 9.2 per cent in the number of transactions, while the number of personal cheques fell almost 28 per cent in volume.
Two notable ways people are replacing cash: Contactless debit payments and e-transfers, which were up 35 per cent and 48 per cent, respectively, in volume over 2019 levels. Just over one-third of people surveyed said they did not expect to return to using cash at prepandemic levels.
The cliché about keeping cash at home is that it’s something you’re influenced to do if you or family members lived through the Depression, or you or family have lived in a country with a history of unrest, war or invasion.
But hundreds of people in the newsletter poll indicated that they have started accumulating cash in the past two years. Even when electronic banking is taking over in day-to-day spending, people turn to cash for security in stressful times.
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