Hi Gillian
It seems to be a bit of a common thing. Since mum became ill she has hugged her handbag constantly, putting it under the pillow at night. She was still visiting the PO every week to collect her pension (no way would she have it put into the bank) until about 3 months before she went into the NH.
When we recently cleared out her home ready for the dreaded sale to fund the NH fees, we found literaly hundreds of pounds stashed in all sorts of places, inside picture frames (found by accident!!), in shoes, old handbags, you name, she'd thought of it. We knew she must have it somewhere because she spent very little, but didn't have the heart to challenge her about it. Sometimes if we found cash when cleaning, we simply took it to the bank for her and said nothing.
I think a lot of it is a generation 'thing' she wouldn't go to the doctor because she wouldn't pay, it after all cost 2/6p! We eventually persuaded her that home GP visits to the over 80s were free!! She still hugs her handbag to her chest all day in the NH, and goes nuts if she hasn't got a least £50, much to the horror of the staff, but they understand it's her 'thing' to feel secure.
So no short answer to the problem, just manage it the best you can.
Cate