![The Cash Conundrum: How Paying with Cash Can Save You Money](https://budgetninja.online/images/jpg/6726-75481-79d8aa6f-3731-469a-aa91-4de664e2c0ae.jpg)
The Cash Conundrum: How Paying with Cash Can Save You Money
As the world becomes increasingly cashless, it’s easy to forget the benefits of paying with cold, hard cash. But our research suggests that using cash can be a simple yet effective way to save money.
In Australia, cash is in crisis. It’s now only used for 16% of in-person transactions, down from about 70% in 2007. The shift towards contactless payment methods has accelerated, with phones and smartwatches making it easier than ever to pay without cash. But is this shift towards cashlessness a good thing?
The rise of cashless payments
Our research team combined the results from over 40 years of research on spending behaviour and payment methods into a large dataset. We found that cashless payments are associated with higher levels of consumer spending compared to cash transactions. This phenomenon is known as the “cashless effect”.
Paying with cash can help you save
So, why does paying with cash make a difference? The answer lies in the “pain of paying”. When we pay with cash, we physically hand over tangible objects, which can be painful. Conversely, paying cashlessly feels less painful because we don’t lose anything tangible. This psychological difference can have a significant impact on our spending habits.
The convenience of contactless payment
In a world where it’s easier than ever to spend money, using cash can be a valuable tool for budgeting. The increased friction felt when using cash can help us make more mindful decisions, saving us money in the long run.
Take control of your finances
So, the next time you’re tempted to whip out your phone or smartwatch to pay for something, consider reaching for some cash instead. Your wallet might just thank you.
“The increased friction felt when using cash could help people better control their money, even just by providing a moment to pause and consider whether a transaction is necessary.” - Our Research Team