This empirical research examines the effect of family control on firms’ cash holding policy. Using a sample of Western European firms, we confirm the precautionary motive for holding cash as family‐controlled firms’ desire to perpetuate the family legacy for future generations motivates them to accumulate more cash than their non‐family counterparts. We also show that, given family‐controlled firms’ long‐term perspective, they focus on cash flow volatility rather than cash flow level. Finally, the relation between financing constraints and cash holdings is not homogeneous: financially constrained family‐controlled firms hold higher levels of cash than financially constrained non‐family firms. Overall, these results suggest that family firms’ cash holding policy is the result not of a specific financial outcome but rather on the strategic objectives of the firm.