Is cash king again? How to keep your money safe

A guide to keeping your finances secure by Furness Building Society

As the UK continues to grapple with a turbulent economic situation and average incomes are under pressure due to the rising cost of living, it appears many have turned to alternative ways of managing their money.

The Post Office recently announced its highest personal withdrawals of cash since records began five years ago - so it seems cash is king again when it comes to personal finance. Despite technological advances over the last few years, cold hard cash is the preferred money management method for many during turbulent times.

UK Cash

But are you confident you’re keeping your money as secure as possible?

Perhaps you’re one of the few who have adopted this cash only approach to purchasing. Maybe you’re even resorting to saving your money in cash at home. If either of these ring true or you’re simply curious about the advantages of saving with a building society or bank, we’ve set out some of the best ways to keep your money safe.

Should I keep my money in the bank?

There are some obvious benefits to keeping cash at home, whether that be immediate access to funds, the ability to make cash purchases or the avoidance of technology. However, most of us will appreciate that this is not the best way to keep your money safe.

There is clear merit in building your savings with a building society or bank. By storing your money in a secure savings account - as opposed to under your bed - you’re providing a far safer space for your cash to live in and you can guarantee your livelihood will always be exactly where you left it.

Whether your savings are small or mighty, ensuring your finances are safe first and foremost, is absolutely vital.

How safe is money in the bank?

The safety of our members is our main priority and when deposited in a bank or building society, your money is securely backed by the Financial Services Compensation Scheme. If in the unlikely event your funds were misplaced or your bank declares bankruptcy, this scheme will guarantee you financial compensation.

The Financial Services Compensation Scheme will cover up to £85,000 of your savings balance. Compare this to an insurance claim against a loss of finances kept at home and the difference is huge. The latter will see you reimbursed with only £1,000 - see what Money Saving Expert’s Martin Lewis has to say on the matter.

So when it comes to keeping your money stored at home, it’s important to consider all of the dangers involved in this decision. Whether it’s the higher risk of theft and loss or the gamble of losing it in unforeseen circumstances such as a house fire or flood damage - these are all factors you should bear in mind.

We would always recommend keeping only what you need day-to-day in cash and leave the safety of savings up to a financial institution.

Advantages of keeping money in the bank

Unlike home savings, a savings account can offer you steady and often rewarding interest rates, meaning the more you deposit, the more you earn. Growing these finances over the years can build substantial collateral, which otherwise would be missed if you kept your money outside your account.

It’s a timely process to build your finances, but savers can give their money the best helping hand by utilising their building society or bank. Check out the various savings accounts and Cash ISAs available via our Savings Hub.

Managing money for young adults

As the cost of living continues to creep up, social media trends on the topic have also started to emerge. An example of this is ‘cash stuffing’ which sees young people withdrawing lump sums of cash and storing it in a categorised folder - with budget sleeves allocated to each area of their life, e.g. groceries, social spend and bills.

Whilst in theory, the idea of money management should always be encouraged, the lack of financial safety or forward planning behind this trend is concerning. Young people in particular are heavily reliant on a healthy credit score for certain financial transactions and dealing only in cash for savings and purchases prevents you from establishing a clear financial record.

Keeping your money in the bank enables you to build up a digital footprint of your spending and savings ability which lenders will take into account. So when making larger purchases such as buying a car or stepping foot on the property ladder, your affordability can be judged on these digital transactions. Cash payments can’t be reviewed, making it quite likely any loan application would fail or further action would be required.

Find out more about how to improve your credit score via our Mortgage Hub

Next steps

Whilst many believe that cash is king during a recession, it’s absolutely vital to not swap your financial habits too much, as this could put you in a vulnerable position. Ensure you always keep your savings in a secure account and minimise the risk of potential loss.

If you’re interested in setting up a secure place to hold your finances, get in touch with our dedicated team of experts today. Send us a message, call our team on 0800 834312 or visit us in branch to find out more about how our savings accounts can help you.