It’s our family’s policy to use cash whenever possible. Why? Mainly because using cash causes us to spend less. When we make a budget, we stick to it. That can sometimes be hard if you use a debit card or credit card instead of cold, hard cash. A plastic card is impersonal. You swipe it and magically get to take something home (as long as there is money in your account), even if you didn’t budget it. But that $50 bill in your pocket…that puppy is personal. It’s attached to your hand. You SEE it. It causes you to really think over what you’re about to buy…realizing that once it leaves your hand, it’s GONE. “Hmmm, do we REALLY need Kleenex this month?” This is one of the biggest reasons to use cash this year.
It’s a proven fact that most people spend less when they have cash instead of a card. On average, folks spend about about 15% more when using a card. While that may not seem like much to you, if you make $50,000 a year, that’s about $7,500 – now THAT seems like a lot, huh? Kinda makes that debit card look a little less attractive. Get thee behind me, Satan! *Cough* Excuse me.
I would like to encourage you to try using a cash budget for a few months to see if you can spend less. It might not work for everyone – in fact, I have a few friends who have the “Money Burns a Hole In My Pocket” Syndrome. BUT, if you set a budget and stick to it, a few times of being out of money for groceries by the 15th of each month might teach you a little bit of self-restraint…which is an excellent character trait to develop.
Obviously, this method works best when you have a budget. And if you don’t use a budget, I highly recommend you start – it will change your life and set you free from debt.
Note – the first two or three months you use cash, it’s not likely to go well. It’s something new to you – and like everything new, it takes a little bit of work to get the bugs and “I gotta have it!” out of your system. Don’t give up …keep trying. You can do this!
Also, we don’t use cash for gas – we budget that out and use the debit card. It’s a little hard to walk into the store and pay for gas when you have little ones in the car. 🙂
Here are 14 reasons you might consider using cash– take the plunge and the cash challenge!
- You’ll spend 15% less, on average.
- It makes it easier to stick with your budget – cash gone? You’re done. With a debit card, you might be tempted to spend more if you know you have a padding in your account.
- You won’t be tempted to go into debt: even if you’re using a debit card, some of those have a padding protection that will charge you interest if you use it.
- Some places don’t even take cards – if you always have cash, you don’t have anything to worry about.
- Possible discounts available – this doesn’t work at all stores, but we’ve been able to get discounts at certain stores (and some doctors offer discounts when paying with cash) when we pay CASH instead of using a card. It gives you negotiating power.
- It teaches your children the value of a dollar. Seeing a card doesn’t really do anything for a child; have you noticed? But if you give them a $1 bill, they light up. They understand. Show them how the money system works.
- Change!!! Really, I’m the Exact Change Queen. I love having quarters, dimes, nickels, and pennies in my pocketbook. You don’t get change with a debit card. 😉
- It’s easier to keep track of how much you spend – if you have $400 for groceries, you know that $400 went to groceries. Keep your receipt in your budget envelopes. But each time you use a card, you have to keep a record of that somewhere so you can deduct that from your budget. I find using cash is just an easier system.
- If you’re robbed, you only lose a certain amount. Ha, ha! Just kidding, but really – if someone takes your purse and you have $300 in there, you’re out $300. If someone takes your purse and steals all your cards, chances are they will spend way more than $300 before you can take care of that. Big mess, even with all those zero liability policies the credit card people promote.
- You cannot overspend. Chances are, you won’t be leaving Chick-Fil-A with dinner if you don’t pay…unless you want to leave in a cop car.
- Easier to reconcile your budget at the end of the month. When you’re using cash, it cuts back on the amount of other transactions that you have to balance…and really, can’t we all use an extra spare minute here and there?
- Cash is fraud resistant. Any time you swipe a card, there is the possibility that your information can be stolen. Yes, most cards offer protection, but I would rather know that I don’t have to deal with all that mess. Remember the minutes a day that we have? I’d rather spend mine wrestling on the floor with my babies instead of on the phone with the bank.
- Fewer fees for the merchant. Merchants have to pay when you use a credit card/debit card system. And guess what? They pass that fee along to you in the form of higher prices. Let’s all use cash and pay less for our knickers!
- Leftovers!!!! Really, at the end of each month, I almost always have a little bit of leftover budget money. Why? Cash is personal and I spend less. You can either adjust your budget for this extra once you see how much it usually is, or you can use that extra for things like paying down debt, buying gifts, or having some fun…because we all need fun, or else life is boring. Guilt-free candy bar anyone?