We have always heard that cash is king. But while there may be some truth in this saying, keeping all our savings at home may no longer be the best option.

Ever since currency was invented, the prevailing thinking in our society has been that more money is better. The accumulation of notes and coins has been a constant throughout history. People saved in case of bad times, they saved money in good times to be able to use it in bad times, in case they needed the money for an emergency or simply to ensure a better future for their children. Obviously not everyone has been lucky enough to be able to afford to set aside a significant amount of their money on a regular basis, but many people have had small savings tucked away in a bedside table, in a hidden safe, or, although it may seem a cliché from another time, under the mattress. 

Security, the reason for the change in habits

Over time, the amount of money kept at home has gradually decreased. And this is no coincidence. The development of the financial system and the advantages it offers has allowed it to play a leading role in the collection of savings, relegating private safes to a certain ostracism. But why has there been such a drastic change in habits? The main factor is security, since it is a fact that, no matter how well hidden we may leave our savings, there is always the possibility of them being stolen.

The other point to bear in mind is taxation, as keeping cash at home can currently entail certain risks with regard to the Inland Revenue. Agent Mireia Cano explains it to us.

Will the money lose value?

The other variable to take into account is inflation and its effects on prices in general. The reason is very simple: the money we keep in the safe or under the mattress, in a year, two years, or ten, will still be the same: it will not multiply. However, basic products, such as the coffee we drink in the corner bar, will have gone from costing one euro to costing one and a half or even two euros. These are the effects of inflation, or sustained price increases.

That is why money kept at home can end up losing value over the years if inflation during this period is high. On the other hand, people who have decided to invest some of their savings, or put them in a deposit or somewhere that gives them interest in return, are unlikely to have been hurt by inflation, and may even have increased their money.

So what is the best option? The decision will be a personal one, as everyone has their own way of managing their money and more or less tolerance for risk. But whichever option you choose, you need to be aware of the advantages and risks that this may entail, to prevent your hard-earned savings from being compromised. 

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