More and more people are using credit and debit cards for rewards, insurance, and convenience. Another MoneyNing blogger even asked if carrying large amounts of cash was outdated.
But to me, cash is still king.
I should qualify my statement, since I do pay all my monthly bills electronically. What I’m really talking about is our discretionary spending. In our budget, discretionary/entertainment spending is just another bill — which we pay weekly by withdrawing our allocated amount from the ATM each Friday afternoon.
My wallet is fat and my smile wide; the bulge in my back pocket is a constant reminder that my finances will stay on track because I’m using cash.
Why I Use (And Love) Cash
1. You don’t need to track spending
Don’t get me wrong: we track our spending. Each weekly and monthly expense is tracked in a spreadsheet so we can analyze and duplicate those expenses each month.
Discretionary spending, however, is a single weekly expense. Each individual purchase we make with the entertainment funds is a big “Don’t care.” I don’t need to track that we spent $50 going to a movie as a family, $30 on Subway for lunch, or $10 on canvas for an art project my daughter wanted to do. What we spent our discretionary funds on is irrelevant to us — as long as we stay within our allocated budget.
2. You know exactly how much you have left
I tried making all my purchases with my debit card. I found that I was constantly wondering exactly how much I’d spent. I could save all my receipts and add them up, or I could check the account online — but I always seemed to forget something, or there would be a transaction that hadn’t posted yet.
Carrying cash keeps me on top of how much of our entertainment funds are left. When my wife asks me, “How much money do we have left for the weekend?” I simply open my wallet and count what’s left. When it’s gone, we’re done spending.
3. You have peace of mind
Though there’s always the threat of your wallet being lost or stolen, there’s also the threat of a bank mistake or financial breach. I get peace of mind by physically looking at the funds I have available. No bank error will cause my card to be declined, resulting in embarrassment and inconvenience. If I want to buy something, cash is always accepted.
Carrying cash for our discretionary spending makes me feel free. Because the lump sum withdrawal is accounted for in our budget, spending the cash is just using money that’s already spent.
Do you like cash for any similar reasons? Or are you strictly a card person?
{ read the comments below or add one }
I personally like having a mix of money in the bank and cash on hand, the latter is handy for unexpected expenses or spur of the moment travel. But I still save my receipts and track my spending at the end of the month. I like to know where every cent is going.
I guess it all depends upon a person’s lifestyle, Alley. I wouldn’t have any “spur of the moment travel.” I am glad to hear you like to know where every cent is going……I suspect your finances are in perfect order because of that!
I’m with you Travis. My wife and I use cash all the time, and usually only use our debit cards for online purchases and specific purchases that have been budgeted in advance, like planned car maintenance. We each have an amount of cash budgeted each month for our own wallets, plus an envelope for groceries and dining out.
Great idea to put cash you’re not spending immediately in an envelope…we used to do something similar – we actually had envelopes for several different purposes – and I’d like to get back to doing it again. Thanks for stopping by!
I love using Credit Card for all my purhase. The best part is we done need to pay any interest ( here in India ) if we repay the amount within 40 days. We can deposit the money back and take a credit again.
It works similarly here to, Sanjib – it’s less than 40 days though. Using a credit cards works for a lot of people, it just doesn’t work well for me because I tend to spend more when I don’t closely track my purchases – as is the case with a credit card. Thanks for your comment!
I like to use cash for entertainment purposes, too. As you mentioned in your article, when it’s gone, you stop spending. No fuss, no muss.
Also, I dislike using a card for really small purchases. If it costs less than $10, I really prefer to use cash. If I’m making the purchase in a small business, a mom and pop place, they definitely prefer cash over a credit card, I’m sure!
I agree, Catseye….those smaller purchases make it time-consuming and inconvenient to reconcile the checking account. That’s exactly why I like to take out one amount of cash for entertainment and small purchase. Thanks for sharing your perspective!
Personally, all these can be done using credit cards and getting points or free flights, for example. And you can’t lose money if you don’t carry it. Everything you say can be done easier on a credit card. You don’t have to track it if you do not want to. None of this makes sense to me, but if it works for you, go for it.
Bank errors? Sounds like you are just trying to justify why you carry cash. If you feel better with cash, do it.
Agree to disagree, Steve – I cannot see how much money I have left by checking my credit card account. Plus, bringing up my credit card account and scrutinizing recent purchases, or loading into an app is terribly inconvenient if I’m trying to make a quick decision. I can count the bills in my wallet in seconds…..
As far as bank errors – I just saw someone at Walmart try to pay with a card and had it declined – they were very confused. Now maybe they’re just poor money managers and didn’t understand how much was really in their account. But, I actually had my account frozen because I was out of town and using the card. Terribly embarrassing and inconvenient to have your card declined for no fault of your own. That doesn’t happen with cash.
When it comes down to it, though, as you said if I feel better with cash or with a card – do what is most convenient for you. I wrote the article simply as a stimulus to get people to think about why they use what they use, and if it’s the right choice for them.
Sounds like your lifestyle and preferences are different – and there’s nothing wrong with that! Thanks for sharing your thoughts!
I guess I am not old school in that way. If I carry cash I end up spending it very quickly. If I use my credit card I am much more conscious of my decision.
I like that the credit card tracks into Mint and I can see my spending instantly if I need to. Plus, I like having a smaller wallet and the added benefit of building rewards, no matter how small the purchase.
I actually find that I also spend cash if I carry it on a day to day basis, Nick…so I normally don’t carry anything with me during the day to work. BUT, once we hit the weekend, or if we’re heading somewhere in the evening for entertainment purposes it’s time to put some cash in.
Having credit cards loaded into MINT instantly would be convenient if I was sitting at a computer and could really analyze things…..but from the screen of a smart phone it seems inconvenient to me. Much easier just to count the bills in my wallet.
Different things certainly work for different people – keep on keepin on with whatever works for you!