Gen Z Sees Benefits of Budgeting with Cash
The less visible a transaction is, the easier it is to overspend, and as more of Gen Z begin earning and budgeting, they’re seeing advantages to having cash in the payment mix to keep costs tangible and under control.
Writing for the Financial Times Adviser, intern Theo Gray—among the Gen Z population, born in the late 1990s and early 2010s—chooses Apple Pay for most of his purchases. He does, however, note that cash has some unique advantages, such as privacy, ease of use and freedom from transaction fees.
[Cash is] a form of payment that cannot be tracked or taxed. It allows for freedom of movement of money like no other form of payment... Without cash, every transaction will have a fee.
His primary concern with declining cash use, however, ‘is the psychological change it has on spending money.’ He references the well-researched ‘pain of paying’ with cash, meaning the physical and mental experience of parting with physical money. When using other payment methods, the ‘cashless effect’ comes into play, making people less aware of their spending and ‘more likely to make unplanned, indulgent and unhealthy purchases.’
When paying with cash, you must take out your wallet and then take out the coins or notes. In doing so you can see the value more clearly of the cash. However, when paying by card, physical or virtual, you do not have that physical touch of handling the money you are spending. It is more like paying with chips at a casino, where you pay with these plastic objects that do not feel or look like money.
Gray’s line of thinking follows that of Han Xinyi, who wrote an article for the Singaporean Youth Council website earlier this year that concluded cash is needed both as a backup for digital options, and to preserve its exclusive benefits in a growing payments landscape. Han spoke to fellow students who felt in particular that the value of cash for budgeting should not be underestimated.
We should be reminded that [cashless] cannot wholly replace the use of cash. Our coins and notes could still help us stay accountable over our spendings and profits.