You may have heard the suggestion, but in a day where even plastic purchases are becoming irrelevant, how can paying with cold hard cash be feasible or helpful? We challenge you to find out by going plastic-free for the next 30 days in order to shake up your spending habits for the New Year. We will begin by informing you on some of the disadvantages you may experience, followed by the surprising benefits.
Cons of Cash
Carrying cash can be a safety concern. You may feel more exposed to not only being pick-pocketed, but to lose the cash altogether. When your credit card is stolen or lost, you have an inconvenience, but not a loss of protection. Check in with a member of our team at Raccoon Valley Bank to learn more about the safety features of our credit cards.
Unless you write down all your purchases, you will have no way to track spending. You’ll need to ensure you have receipts printed or emailed to you if there is a chance of return. Cash takes up a lot of room, especially if there are coins. This becomes consistently challenging if you only carry a wallet. You don’t want to be THAT person who spills their clanging change all over the floor. To say nothing of the inconvenience you will cause others in line behind you, as their plastic taps impatiently on the counter. We recommend using all of the coins you can first, so you’re not weighed down with change.
One of the primary reasons many utilize credit cards is the rewards. With cash, the only reward you can hope to receive is a punch card for your next visit. You also lose out on the opportunity to build your credit. Additionally, an obvious downside would be you are unable to purchase items online or make travel plans. This may be an economic imperative that you cannot accomplish with cash.
Pros of Carrying Cash
Leaning into the pain of cash-only can be good for you. Research shows that the act of spending cash is emotionally more painful than it is using a debit/credit card. Because of this, you may, in fact, spend less. With each purchase you make, you see your cash value deplete. Unlike a credit card, the effects are immediate. You don’t need to wait until the end of the month to feel the pain, when it is most likely too late.
You Become a Budget Master
Some people have had success with the envelope system in their budget planning. It is a way to limit your spending to a predetermined amount allotted in each envelope. They are separated into different categories such as grocery and gas. It helps you to be aware of how quickly that $4 latte takes away from your “fun money”. This is more hands-on than establishing multiple savings accounts.
Research shows that you also have more of an appreciation for your things when you buy them with cash. It’s an aesthetically pleasing reward as you are seeing what your money can get. You are better able to see your hard work pay off. Moreover, if you find yourself taking better care of your belongings, don’t be surprised.
While it may not be possible to go cash-only forever, your Riches Reset will help to cleanse you of negative habits to start fiscally strong in the New Year. Afterwards, come see us at Raccoon Valley Bank to see what products can help you reach your financial goals. Best of luck!