Cash Remains the Perfect Way to Manage a Household Budget

calendar iconApr 6, 2021


The average American today is $90,460 in debt, according to Experian, which recently published a study exploring debt balances and composition by age group. While many factors contribute to rising personal debt, there is a reliable budgeting tool freely available to all: cash.

Gen X (40–55) top the list of average debt balance by age group with a figure of $135,841, followed by Baby Boomers (56–74) at $96,984. Below the overall average, Millennials (24–39) have $78,396 with the Silent Generation (75+) at $40,925 and Gen Z (18–23) already having accrued an average $9,593 of debt.

The 56+ age groups have actually seen a significant decrease in debt since 2015 (around -7.5 percent for Baby Boomers and -7.7 percent for the Silent Generation) while Millennials have seen the largest increase: a startling 58 percent. While Gen Z have the lowest overall debt balance, they find it more difficult than other groups to make repayments, with over 12 percent of their credit card accounts 30 days or more past due in 2019.

This—according to CNBC—is where cash budgeting can help. They pick up on the example of student Kristy Epperson who managed to pay off $20,000 in student loans and car loan debts in just one year. To achieve this impressive feat, she worked two jobs, created an expense spreadsheet to track her purchases and—crucially—ditched her credit card in favour of cash. ‘I felt using cash would hold me accountable,’ she explained.

Withdrawing cash at regular intervals and using it to cover all expenses—starting with essentials and ending with luxury outgoings such as concert tickets or dining out—can be a helpful way of staying within a budget given notes and coins provide a visual reminder of exactly how much remains on a given day. CNBC noted Kristy Epperson—now free of debt—was moving onto saving up enough cash to buy a new car and replace her old television, and ‘hadn’t used her credit cards in months.’

Gen X have the highest credit card balance compared to other age groups, at $8,215. They also have the highest auto loan balance ($21,570), student loans ($39,981) and average mortgage balance ($238,344). In the latter category, at least, Millennials are a close second, with mortgages of $224,500. When it comes to personal loans, the picture is different, with Baby Boomers having the highest personal loan balances—$19,253—compared to the lowest, Gen Z, with $4,526.

In conclusion, Experian notes that while it’s normal to carry debt, for people to protect their credit ratings and thus ensure ongoing access to the best financial products and services, it’s vital to keep on top of repayments. Using cash is an easy way to start!

Last Updated: Apr 6, 2021