Friday’s Rogers Communications outage was just so 2022.
In health care, emergency rooms are overloaded and too many people can’t find a family doctor. Airports and passport offices are swamped. Food is becoming unaffordable. In parts of Ontario, electricity was out for several days, and longer in some neighbourhoods, after a May storm. And then came a daylong outage at Rogers last week that unplugged the internet and phone service for many people and businesses.
A question we should all ask ourselves right now: How do we crisis-proof our lives and our finances? One answer is obvious after both the blackout and Rogers: have some cash handy.
Electronic payments such as debit, credit, e-transfers and apps like Google Pay and Apple Pay are tremendous. Yes, using them inserts you into a global corporate nexus of information gathering about you and others. In exchange, you can travel your city, country and the world while paying for whatever you need without a coin or bill in hand.
The cost of this incredible lightness of finance is that it can be taken way in a flash. Some time early Friday morning, the Rogers telecom network went down and clients of the company could no longer use their internet-connected devices to bank or invest. Many stores, businesses and other organizations were also cut off from electronic networks, meaning they could only transact in cash in some cases.
Without cash in hand, you can be excluded from the economy in a crisis. Worse, the Rogers outage shows how the lack of cash is not an easily fixable problem in today’s world of interconnected electronic networks. In our Ottawa neighbourhood, our bank’s nearest ATM was out of service last Friday morning.
Do not expect to be able to get your hands on cash after things go south. Consider keeping a minimum cash balance in your wallet, and having some bills put away at home.
Back in March, I surveyed readers of the Carrick on Money e-mail newsletter about whether they keep cash at home. More than 6,600 people replied and just over 51 per cent said they did keep money at home. The average amount was an unexpectedly high $5,069.
Base your cash requirement for your home on how much it would take to keep your household running for several days to a week. Consider how much you’d need if your vehicle’s gas tank were empty and you were low on groceries. For your wallet, $50 to $100 sounds like enough to cover incidental costs for a couple of days.
At bare minimum, stick $20 in your wallet. Or, better, four $5 bills. Nothing defeats the utility of cash like presenting bills that overwhelm a stressed-out retailer’s ability to make change.
After the huge eastern seaboard blackout hit Ottawa in 2003, I put $200 in $20 bills into an envelope and added it to an emergency kit in our basement, along with a crank radio, bottled water, batteries and a few other things. That envelope was still untouched when my wife and I moved in 2019.
But in the span of seven weeks in 2022, we’ve seen two events that affected the payments system briefly. Even before the May blackout and Rogers outage, there was a prevalent sense of unease that drove people to stockpile cash. In the newsletter survey, people cited the war in Ukraine and concern about Russia as reasons for holding large amounts of cash, along with the pandemic, fear of power and system outages, general emergencies and convenience.
Both in a geopolitical and economic sense, it’s hard to be optimistic about a near-term return to normal. Economically, we seem to be living at a time where developments are unfolding in an accelerated way – years of change happening in months.
Cash is a calming factor in times like these, and it has other uses as well. You can’t help out someone on the street with a debit card or phone app, and tipping service people is easiest with cash, too.
Electronic payments – debit, credit, e-transfers and mobile phone apps such as Google and Apple Pay – still rule if you value convenience. But we all need a backup system in the form of cash. Add that lesson to the many being taught in this year of never-ending drama.
PERSONAL FINANCE COLUMNIST
The Globe and Mail, July 11, 2022