5 Reasons to Pay with Cash in a World of Electronic Payments!
In a world of electronic payments, paying with cash seems old-fashioned and inconvenient. It’s much easier to hand over your debit or credit card or tap your cell phone. However, could there be good reasons to pay for your purchases with coins and banknotes? Could the ease and convenience of electronic payment methods be encouraging you to overspend on a long-term basis? Here are five reasons to use cash rather than electronic methods of payment.
Cash Helps You Keep Within Budget
If you withdraw a certain amount of cash to cover your discretionary spending each week, you’ll see in cold, hard terms exactly how much money you have left to spend during the rest of the week. This will make you think twice about spending money on unnecessary purchases.
Conversely, if you pay for something electronically, it’s easy to ignore how much you’re spending. It’s also more difficult to gauge whether or not your purchase will mean that you’re much closer to your weekly spending limit than you’d like to be, unless you check your balance continually.
In addition, you’re less likely to agonize over a purchasing decision if you don’t see the amount you’re handing over for the item in cold, hard cash. If the amount paid is just a number on a screen, it’s easier to justify your purchase than if you have to pay for it with a wad of banknotes.
Cash Helps You Keep Track of Your Bank Balance
Have you ever overestimated how much you have left in your checking account because you’ve forgotten about one or more purchases that you made with your debit card? If you always use a debit card when you buy things, it’s very easy to forget about certain purchases, and overestimate your bank balance. This is especially true if you’ve bought a large number of inexpensive items in several different stores.
Cash Encourages You to Look for Better Deals
If you see exactly how much cash you have to spend, you’ll be more motivated to look for discounts, special offers, and lower-cost alternatives in order to gain the maximum value from your hard-earned cash. If you always pay electronically, it’s easier to pay more than necessary for each purchase and hope that you’ll have enough money left in your account until your next payday.
Cash Means That Your Purchases Won’t Cost You Any More in Future
If you use your credit card to purchase something and you’re unable to pay your monthly credit card bill in full, you’ll end up paying more for whatever you bought because you’ll incur interest. Similarly, if you go into an unauthorized overdraft because you haven’t kept track of your spending on your debit card, you’ll pay fees and interest on top of the amount you’ve already spent.
On the other hand, if you pay with cash, you can be assured that there is no risk of ever paying any more for the purchase. The only exception to this is, of course, if the cash you’re using comes from a cash advance on your credit card. If you need to borrow money, it might be more cost-effective to put every purchase on your credit card than to obtain a cash advance and spend the cash.
Parting with Cash is an Emotional Experience That Helps You Rein in Your Spending
Paying with cash engages your emotions more than paying electronically. You’re more likely to put the brake on your spending if your emotions are involved.
When you pay with cash, you feel a sense of loss as the money is taken away from you. When you hand over a card and type in your PIN number or sign your name, you don’t feel the same sense of loss. If you don’t think this is true, try paying only with cash on one day and then only with electronic payment methods on another day. See how much you spend on each day. Also, notice how you feel whenever you buy something, either with cash or electronically.
If you’re trying to keep to a budget or reduce the amount of money you spend on impulse purchases, paying with cash will help you spend less. If you’d also like to reduce debt, paying with cash will mean that you won’t incur any charges or interest. If you’re still skeptical, experiment with paying for everything you buy with cash for a week and see if you save money. +