Where do you keep your money? If you’re like 29% of Americans, it’s hidden in an old shoe box, buried under the towels in your linen closet, or tucked away in your sock drawer. An alarming number of people, including 41% of millennials, are keeping their savings at home, a 2015 American Express survey found, and more than half of savers have their cash squirreled it away in a “secret” location.
The old-school under-the-mattress savings technique appeals to people who use an envelope system for budgeting, as well as those who don’t trust banks. But it comes with risks, including the possibility your money will go missing.
“Hiding cash in a secret location is never a good idea,” Coleen Pantalone, associate professor of finance at the School of Business at Northeastern University, told Main St. You may forget where you put your money, or you could die, leaving behind clueless heirs who inadvertently sell the box with your savings at a garage sale.
Hidden in your home isn’t the only place where your money isn’t as safe as you think, especially if the savings vehicle is the wrong fit for your goals. Certificates of deposit (CDs) may seem secure because they earn guaranteed interest and are FDIC insured, but they’re the wrong place for a young person to put their retirement savings, because your return will be likely so low you’ll actually lose money to inflation. A 401(k) is good for retirement savings but a terrible place to keep your emergency fund because you can’t easily get at the money and you’ll pay penalties for early withdrawals.
While the best place to keep you money depends on your situation, there are some places where it rarely, if ever, belongs. Here are four places where you shouldn’t keep your money.