Saving money is usually achieved through formal methods such as depositing cash into a savings account. However, a more informal way of putting away money for the future is to keep it locked away at home. Analysis from the Bank of England has shown a tenth of Britons are holding more cash at home because of the pandemic.
Sarah Jones, chief cashier and director of notes at the Bank of England, told the Public Accounts Committee there had been increased instances of holding money back throughout the COVID-19 crisis.
Ms Jones stated money was being kept by both Britons and firms, with cash deposits falling this year.
She told MPs this had increased the number of notes in circulation.
Ms Jones continued by stating that stockpiling, in various forms including cash, had been an issue throughout the pandemic.
However, when keeping cash at home, there are a number of risks Britons are taking with their funds.
While interest rates are currently low, there is still some benefit associated with putting away money into a savings account.
Simply keeping cash at home means interest cannot be earned, and funds do not stand a chance against inflation.
In addition, the security, or indeed lack thereof, when keeping cash in the home may prove a significant issue.
If a home is broken into, savings may not be included in a person’s insurance, meaning they could be lost forever.
And natural disasters to the home such as fire or flood could also ruin a person’s savings.
When depositing into a UK bank account, funds are usually kept safe under certain policies.
Many banks and building societies now subscribe to the Financial Services Compensation Scheme (FSCS), meaning funds are protected should the worst happen.
At present, the FSCS protects up to £85,000 worth of savings per person, per financial institution, rising to £170,000 for joint accounts.
And this means banks are considered to be one of the safest places to keep money.
However, it is important to check who owns a bank.
This is because in some instances banking groups own multiple banks, which means even if money is split, because of an umbrella ownership, higher amounts might not be protected by the FSCS.