Lots of folks for various reasons say that you should only use cash. It will magically solve all of your money problems and keep the Trilateral Bildenberg conglomerate from knowing what your favorite order at Krystal. It is a cure all.
One of the theories is that people think harder before reaching into their wallet for cash instead of just swiping a card. Personally I do not think that argument is particularly meaningful. Maybe it is like that for older folks who spent most of their adult lives doing things with cash. For those under 30 or so it is my observation that there isn’t really a difference. Heck, some kids get allowances and pay for chores from their parents via online bank transfers these days. Unless you are the kind of person who gets stupid drunk and buys the whole bar a shot of Crown on your credit card or are so addicted to shopping that you spend money you don’t have I would say it doesn’t matter much.
Cash is better if you are seriously working about a tight budget. No surer way to spend $50 or less on groceries than to go to the store with two twenties and a ten. Obviously with cash you can only spend what you have. For those sorts of absolutely no wiggle room situations this could have a place I guess.
The downside to cash is that it is a lot harder to track where it has gone. I usually get $100 when I go to the ATM. A week later when I have $65 there is about no way I could tell you what I spent $35 on. Yeah I could carry a little notebook and a pen and write down every transaction but I am not actually going to do that and I do not know anybody who does. An advantage of online banking and services like Mint.com is that you can look and see what you have bought. Not in a month when statements come but this weekend when you are curious.
While nowhere near as desperate as trying to stretch things out to payday or whatever and going all money Nazi with cash it is good to know where your money is going. It lets you see trends you would otherwise miss and make decisions. Instead of saying “where did our money go?” you can look. Maybe you have started eating out a lot more or something and it is adding up to more than you would like. With this kind of information you can make choices that aren’t possible due to lack of information if you use cash.
Personally we mostly use cards because they are convenient. We both keep cash on us because it is necessary for personal transactions, sometimes it is convenient and it is good to have just in case (in addition to a stash at home). Also we like being able to look back to see transactions and recent trends as it helps us manage our money better.
There is some sharing of information with the Trilateral Bildenberg conglomerate but we are OK with that because we are boring. Who cares if somebody sees how much cereal we buy? If I was going to buy a thousand gallons of diesel, a truck load of chemical fertilizer, and some miscellaneous stuff from radio shack on the same day I rented a moving truck I would use cash. Otherwise I don’t see it as an issue.
Cash makes it slightly easier to manage total amounts and cards make it easier to keep track of spending trends so on the whole it is a wash. My advice is to use whichever you prefer.
One of the theories is that people think harder before reaching into their wallet for cash instead of just swiping a card. Personally I do not think that argument is particularly meaningful. Maybe it is like that for older folks who spent most of their adult lives doing things with cash. For those under 30 or so it is my observation that there isn’t really a difference. Heck, some kids get allowances and pay for chores from their parents via online bank transfers these days. Unless you are the kind of person who gets stupid drunk and buys the whole bar a shot of Crown on your credit card or are so addicted to shopping that you spend money you don’t have I would say it doesn’t matter much.
Cash is better if you are seriously working about a tight budget. No surer way to spend $50 or less on groceries than to go to the store with two twenties and a ten. Obviously with cash you can only spend what you have. For those sorts of absolutely no wiggle room situations this could have a place I guess.
The downside to cash is that it is a lot harder to track where it has gone. I usually get $100 when I go to the ATM. A week later when I have $65 there is about no way I could tell you what I spent $35 on. Yeah I could carry a little notebook and a pen and write down every transaction but I am not actually going to do that and I do not know anybody who does. An advantage of online banking and services like Mint.com is that you can look and see what you have bought. Not in a month when statements come but this weekend when you are curious.
While nowhere near as desperate as trying to stretch things out to payday or whatever and going all money Nazi with cash it is good to know where your money is going. It lets you see trends you would otherwise miss and make decisions. Instead of saying “where did our money go?” you can look. Maybe you have started eating out a lot more or something and it is adding up to more than you would like. With this kind of information you can make choices that aren’t possible due to lack of information if you use cash.
Personally we mostly use cards because they are convenient. We both keep cash on us because it is necessary for personal transactions, sometimes it is convenient and it is good to have just in case (in addition to a stash at home). Also we like being able to look back to see transactions and recent trends as it helps us manage our money better.
There is some sharing of information with the Trilateral Bildenberg conglomerate but we are OK with that because we are boring. Who cares if somebody sees how much cereal we buy? If I was going to buy a thousand gallons of diesel, a truck load of chemical fertilizer, and some miscellaneous stuff from radio shack on the same day I rented a moving truck I would use cash. Otherwise I don’t see it as an issue.
Cash makes it slightly easier to manage total amounts and cards make it easier to keep track of spending trends so on the whole it is a wash. My advice is to use whichever you prefer.
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5 comments:
Sigh...I'm still not used to being lumped in with the 'older folks'.
Personally, I use both cash and debit. It all depends on my mood but I also keep all the receipts.
A couple of years ago, Steve Forbes was on a business news television show and said that 35% of the Greece economy was "underground", due to red tape in running a business and high taxes. Wow. That's a lot of cash transactions. If our environment begins to track the way of the Greeks and someone plans to go "underground",i.e run a side business "off the books", cash is king.
In a previous life, I had the opportunity to look through other people's financial transactions, and you're right, if you're abiding by the system, it was boring. But, if an individual was misbehaving, I found it very interesting, entertaining and it told a story.
Just remember that if hits your bank accounts or credit cards, it's available for prying eyes for at least 7 years and sometimes longer.
grasshoppa
For some people, trying to reign in their spending, that $100 would be diviied into separate envelopes, and spent only on whatever the certain envelopes were for. When the envelope is empty, no more $ gets spent in that area. We've been on a tight budget in order to save for certain items, so we pull cash for groceries, doc visits/meds, spending, eating out, etc. For gas, we use debit, cause I'm not going inside to pay, plus I'm not going to splurge at the pump. But even that is accounted for in our monthly budget. Now, having used mostly debit cards for yrs, I was able to see where we spent our $, and how much monthly, so that I COULD come up with a reasonable budget for us. One that gave enough room, yet tightened enough so we could save. And while I was against paying cash for awhile, once I diviied up every single spare $ into envelopes....our spending stayed w/in budget. And our savings quickly added up.
I guess cash didn't work for you, cause you had no plan for the cash you pulled. If you have a plan for it, it can and will work, and you'll know that you put $x into the eating out envelope, and now there's $y left, so you spent $z on eating out the past month/week/2wks.
With the ease of online shopping, opting to use cash only is even more difficult. I know I try to use cash only when out and about but I rarely hesitate to just click and buy online.
Eh, I am familiar with the Dave Ramsey envelope concept. I find it a bit cumbersome and am not going to walk around with 10 envelopes all the time. I get money and put it into my wallet. However if it makes you happy then go with it.
As I said in the post cash works best for making sure you stay on budget. If you take $60 to the grocery store you will spend $60 or less. However with a debit card the temptation to buy $60.52 or $65 is definitely there. On the other hand for me the tracking mechanisms (like Mint.com) you can easily use with cards are a big benefit in terms of visibility. This is especially important over time. I could for example look back and how many tanks of gas we used 3 months ago.
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