When a person gives advice, they should make every effort to make it good advice. That is particularly true if the person giving the advice is paid to do so.

I recently read a quote from a Certified Financial Planner (CFP) that was so uninformed and ill-conceived as to be a plausible case for legal action. This CFP recommended that $100-$200 should be kept at home for emergencies that may be caused by weather-related power outages. “Enough to buy a few gallons of gas and make a few tips to delivery personnel.” Okay, to be fair that may be enough if it is your house, or your immediate neighborhood that is without power because that only lasts for a few hours or perhaps a day or two. But, when you are dealing with floods, tornados, hurricanes, and other area-wide outages that is very bad advice.

We were without power for two weeks once due to a major ice storm, and more recently 6 weeks due to a Cat 5 hurricane.

Here is the reality:

• You can’t buy gas. Gas stations need power to pump gas.
• There will be no deliveries so you needn’t worry about money to tip.
• If you have an electric car it is useless.
• Your tap will not produce water as the water plant has no power to operate.
• Your house will not be one of the first back up and running. Hospitals, emergency services, nursing homes, and government buildings will be a much higher priority than your house.

A few grocery stores and drug stores will be operating during daylight hours out of tents in their parking lots. These and any other merchants or services that may be functional will take cash only.

Banks and ATM machines and credit card machines will not be open or functioning. So, any economic transaction will have to be with cash. What is the right amount of cash to keep on hand? There is no set amount that fits all situations. It depends on many factors, but enough cash to handle essentials like food, water, and drugs for a month or more is needed. How many of these items you keep stocked at all times is a major factor in deciding the amount of cash to keep handy. In any case, a couple of hundred dollars is not the right amount.