In this day and age, money management is a critical skill for financial success. A considerable aspect of money management involves knowing where to store one's funds. Although people have traditionally kept their money in banks, more and more people are beginning to question the wisdom of the aforementioned decision. Furthermore, those who are against keeping some or all of their earnings in banks are wondering about the existence of other alternatives. Thankfully, there are options for people who wish to store their funds elsewhere. The case for keeping minimal capital in the bank is also quite strong.
The Necessity and Flaws of Banks
In 2018, banks are, arguably, a necessary evil. Virtually everyone has a bank account. In most situations, these accounts are essential for transferring, receiving, and withdrawing funds. Nevertheless, banks are inherently flawed and while closing a bank account is ill-advised, exercising certain degrees of caution and pragmatism is highly recommended.
First and foremost, whenever one deposits money into a bank, it is no longer truly "theirs." Granted, the numbers of the deposited amount shows up on any account, but in actuality, banks loan out deposited funds. These funds are why accounts which incur negative balances are still able to function in at least some capacity. Nestmann furthermore states that were everyone who deposited money into a bank to withdraw all their money simultaneously, the bank
would not be able
to cover it. This, in and of itself, serves as credence to the reality that your money stops being "your" money when you deposit it into banks.
Despite the aforementioned flaws, keeping somewhat minimal amounts of money in the bank is still a sound judgment call. There are still some businesses which do not accept cash payments. Therefore, a credit or debit card will be necessary in order to receive certain goods or services. Transportation via Lyft/Uber, travel accommodations such as Airbnb, and the purchase of plane tickets are several instances where a credit or debit card is required for payment.
In the case of banks, keeping some, but not all or even most of your funds in an account is the smartest decision in 2018.
Other Places to Store Capital
While many people are aware of the problematic factors of banks, they remain unaware of other places to store their earnings. While some individuals opt to keep large amounts of cash in safe boxes or other hidden places, Investopedia confirms the
variety of options
for those who wish to store their capital outside of banks.
Government bonds, precious metals, and other collectible assets are great avenues for those who wish to store their money outside of traditional banks. Unfortunately, there is not a risk-free location where money can be stored, however, with the proper steps and decisions, each person can greatly minimize the risk of losing capital. Many people have found that storing various amounts of earnings in different locations is preferable than keeping all of their money in one metaphorical basket.
A Final Word
Banks should be viewed and treated as necessary evils. While some people may view banks as virtually secure, this is not as accurate as most would like to think. Ultimately, the decision lies with each individual; however, most people usually feel the inclination to protect and preserve their earnings.
Authored by Gabrielle Seunagal