Cost of Living Crisis Quickens Cash Comeback
The UK has seen record demand for cash services as Brits seek better ways to manage budgets stretched by the deepening economic crisis.
Britain’s Post Office, which provides banking alongside mail services, reported handling £801 million of personal cash withdrawals in July ($968 million or €948 million), up more than 20 percent from a year ago and the highest figure since records began five years ago. Cash deposits were also up, with individuals depositing £1.35 billion and businesses depositing £1.13 billion, each representing a month-on-month increase of around two percent.
The Post Office attributes the additional demand for cash services to more people using cash to manage their budgets, citing their recent survey that found 71 percent of Brits planning a ‘staycation’ in the UK intended to withdraw cash before going.
We’re seeing more and more people increasingly reliant on cash as the tried and tested way to manage a budget. Whether that’s for a staycation in the UK or if it’s to help prepare for financial pressures expected in autumn, cash access in every community is critical.
Natalie Ceeney, Chair of the Cash Action Group, agrees people are taking advantage of the physical nature of cash to divide their money between different essential payments and—where possible—saving up for luxury items and holidays. The move towards cash aligns with a recent TikTok trend that’s seen ‘cash stuffing’ surge in popularity. Research also backs the use of cash for budgeting, since numerous studies have concluded cashless payments can encourage frivolous spending while the ‘pain of paying’ with physical money helps discourage it.
Cash has been in decline for well over a decade, the pandemic accelerated this, but now it’s going back up, and that’s absolutely because of the cost of living crisis. It helps people budget, as using cash means you can literally count the pennies. We all know that if you pay with a card, it’s so easy to spend money you don’t have.
Salford University student Kira Hayward has been using cash stuffing—dividing cash between envelopes labelled with different expenses to ensure she has enough in each to cover bills such as rent and food shopping before she makes any non-essential payments—after being introduced to it on social media.
I went on Instagram and YouTube and I saw these physical budget binders. I take the money out of the bank and I budget for things like shopping. If I know I have £80 in my personal shopping for the month, I can’t go over that.