You must have heard about people who literally stash money in their homes. This is not a recent trend. Keeping money under the mattress is a traditional method that started years ago.
But how did it start? And why would anyone feel safe with wads of cash under their mattress? Let’s hit the ground running.
Part 1 — Origin of the Practice (The Great Depression Era)
Keeping money under your bed did not gain wide popularity just like that. Someone or something must have prompted it. Therefore, we can trace this practice back to the 1930s in the US. Indeed, the 1930s were difficult times for many Americans. Those who were not so rich had to battle for economic survival.
The era was a terrible time no one wanted to witness. This was the Great Depression. In 1929, there was a crash in the stock market, which plunged many into poverty. If you could not afford to buy food for survival, how could you afford a personal safe to keep your money? It seemed unwise to spend on personal safety when poverty was the order of the day.
Also, wages were decreasing drastically. And the majority’s paystubs did not look encouraging. Likewise, purchasing power was low. Everything was in disarray, thus people resorted to keeping their money under the mattress.
Furthermore, the stock market crash largely affected Americans' trust in the financial institutions. Only a few people trusted banks with their money. This mistrust led to multitudes trooping to the banks to withdraw their life savings. This was known as the bank run.
Let's shed more light on what a bank run entails.
Part 2 — What is a Bank Run?
In simple terms, a bank run refers to people's fears that banks may not be able to pay back their deposits. The result is that they start rushing to the banks to demand and withdraw their savings. This was not even a case of withdrawing a percentage of their money in the 1930s—the masses wanted to collect their money to the last penny.
If you are aware of how banks operate, financial institutions store only limited cash in their strong rooms. It is not practicable to keep every customer's money in the bank. There are investments that banks also subscribe to so as to make profits.
However, the people did not care how the system worked. They kept hammering their rights to get total repayments. Thus, banks were forced to sell off their investments and assets below market prices. They were losing out, and some financial firms suffered liquidation.
Notwithstanding that times are changing, keeping money under the mattress still is a thing. But while having a few dollars at home for emergencies is justified, at no point should your mattress replace the bank vault.
This only led to greater panic. Friends were informing families to go get their money out quickly. People did not think about it for a second. They feared their money was going down the drain.
This cycle continued, as Americans believed their money was safer in their own possession. While boxes and safes were more suitable to keep their savings, many Americans could not afford the expenses. Hence, many people resorted to safe-keeping under the mattress.
Right from the 1930s, keeping money under the mattress became famous. When people have a few dollars, they prefer putting it under the bed to driving to a bank. But research has shown that some people have misconceptions about putting money in the bank. For example, investigations revealed that many people who keep money at home think charges for saving money in banks are neck-breaking.
In fact, money boxes naturally appeal to a set of people. Also, others believe no one can rob their home, so they better hide their money in their favorite spot under the mattress.
Further, we better not ignore the fact that people living below the poverty line cannot be motivated to keep money in the bank.
Part 3 — Why Keeping Money Under Your Mattress is Still Prevalent
What transpired in the 1930s Depression-era is beginning to repeat itself. A Harris Poll revealed that not less than half of Americans are losing trust in the banks. Indeed, this is a cause for alarm. While some degree of bank runs have been observed, the percentage is mild compared to what transpired in the 1930s.
According to a recent USA survey, 43% of Americans prefer to keep money in their homes. Among them, a good number are loyal to keeping money under the mattress. Here are other reasons people keep money under the mattress in the present age.
- Everyone wants some convenience — Many people keep money at home because it is convenient. Some live far away from ATMs, so it makes sense to have some cash at home. For example, if you need to pay a contractor, should you drive an hour just because you need to cash? That is unwise and uneconomical. Someone living in a remote area has a more significant tendency to have cash reserves under the mattress.
- Emergencies — Having cash reserves is particularly useful in cases of emergencies. Imagine if you needed to help a friend or family member out. How long can they wait? Also, you may need to get some essential items for your family to stay healthy in times of crisis.
- Bank charges and ATM fees — How does it feel to part with a fraction of your savings when you use an ATM? Everyone dislikes ATM fees, especially when a bank deducts money when you are out of their network.
If you do not live near your bank's ATM, it will cost you to withdraw money. Therefore, some people are keeping money under the mattress.
The Takeaway?
Notwithstanding that times are changing, keeping money under the mattress still is a thing. But while having a few dollars at home for emergencies is justified, at no point should your mattress replace the bank vault.
Vladyslav Kushneryk is Chief Marketing Officer for Paystub Now, an online resource for individuals seeking simple and quick documentation covering many services. He has more than 10 years of experience in business development, finance, marketing and sales.
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