In today’s world of credit and debit cards, electronic payments, and e-checks, paying for purchases with cash is becoming more and more unheard of. Yet, while this antiquated method of purchasing goods and services may seem somewhat outdated these days, there are many instances when using your greenbacks can actually come in handy – and can also be quite beneficial.
The Real Benefits of Using Cash
Even though it may not always be the most convenient way to make your purchases, there are still a number of benefits associated with using cash. First, last holiday season, we saw why using cash can help keep your identity secure – especially if you were a shopper at Target or Neiman Marcus. Online data breaches can certainly compromise your information – and your bank account – if using debit or credit.
On a more personal level, though, one of the biggest benefits to paying with cash is when you are trying to stick to a budget. In fact, there are numerous studies that have been conducted where paying by cash and by credit have been compared, and they have all come to a similar conclusion – people spend more when they use credit.
A big part of the reason for this is because individuals just don’t seem to feel that they’ve actually spending “money” when they use a credit card. This is what is referred to as the “disassociation factor.” It can be especially prevalent when you don’t have to worry about the bill coming due for several weeks in the future.
Paying for goods and services with cash, on the other hand, makes you accountable immediately for your purchases. It can oftentimes be compared to a dieter keeping a diary of the various foods that he or she has eaten throughout the day – and it can be a real eye-opener when it comes to adding up just how much you spend on small purchases.
In this case, although just a few dollars here and there may not seem like a lot of money, when it’s all added together, it can come to a substantial amount. One of the best ways to really track just how much you’ve spent is when you begin the day (or the week) with a wallet full of cash and end it with none.
The Prescription for Using Cold Hard Cash
When working towards saving money and keeping your expenses down, there are many financial experts who agree that using cash – and keeping the plastic at home – is the best path to take. This is especially the case if you’ve already been burdened by debt and you are working your way out of it.
By being more mindful of what you are spending your money on, you are not nearly as likely to make unnecessary impulse purchases, nor are you as apt to overspend on goods and services – in essence saving you a bundle over time. This, in turn, will allow you to put much more into your savings for the future, ultimately netting a nicer retirement lifestyle down the road.