How to Make Cash Work for You
Apr 28, 2023
A recent Reader’s Digest article explores the ‘numerous advantages to using a cash-only system’, speaking to experts who outline benefits from avoiding fees and overspending to protecting personal information and credit rating.
Educator and author Danny Kofke—known for his book The Wealthy Teacher: Lessons for Prospering on a School Teacher’s Salary—opens by explaining the ‘pain of spending’ with cash, which makes people more aware of their expenditure and less likely to make choices they may regret later.
Many of us have an emotional attachment to those crisp, green bills. We know how early we got up and how long we worked to earn them. This makes it much harder to part with them compared to just swiping a piece of plastic through a machine.
Personal finance blogger Saranya Ramanathan backs this up with the observation that, with cash, it’s easy to immediately visualise how much you are spending. ‘You see dollars turning into cents right in front of your eyes… Using cash is a mind trick to stop overspending.’
Small purchases are highlighted as a good opportunity to use cash, with some retailers also offering discounts for doing so. Beverly Friedmann, Content Manager for the Reviewing This website, adds that paying cash is ‘a nice gesture’ as opposed to just ‘filling out the gratuity option on the bill’ (click here to read more about the benefits of cash tipping for service workers).
‘Cash is a one-time deal: no fees or debt.’ While using credit cards involves the risk of late fees and accrued debts, ‘you’ll never overdraft your bank by using cash’, says Friedmann. Realtor Chantay Bridges agrees that avoiding or limiting use of credit cards can be an advantage when managing a budget and trying to save.
When you utilise cash, there are no worries about late payments, payoffs or repossessions. You have no worries about your credit being affected. Cash assures that no creditor will ever call you wondering where their payment is.
Bridge also values cash for budgeting, saying ‘it limits impulse buying and helps to keep you on track because you are only spending what you have to spend, which is a win-win for your overall goals.’
If you are truly serious about your goals of saving, then cash will always be the way to go.
The final benefit of cash Reader’s Digest highlights is sheer convenience. It is an always-on, reliable source of payment that will work without electricity or an internet connection, and offers an essential backup should a card be declined or a payment service be temporarily offline.