Many psychological studies conclude that payment methods matter and cash is the most effective way of making a purchase. In this blog you’ll find out the value of cash and the benefits it will have on your life.
Do you struggle to stick to your budget? Are you prone to spending money on things you don’t really need? It’s just so easy to swipe your card without thinking about the consequences. It’s not until after that you notice how much money has gone out of your bank account… so, what if we tell you there’s a way to cancel out this risk? Keep on reading!
Paying with cash is satisfying
Paying with a card has many benefits, but appreciating the value of money isn’t really one of them. There’s just something about paying for things with cash that gets a shopper itching. A study conducted by Professor Avni M. Shah indicates that paying with cash is a way to add positive emotion to transactions which promotes satisfaction in spending behavior.
A paper that appeared in Journal of Experimental Psychology says there are huge differences in spending based on how shoppers pay for things. The same research also says the more the transparent way of paying the greater the satisfaction. Make sense, right?
Cash makes you a conscious buyer
Using cash helps you to avoid impulse purchasing. A consumer psychology study performed on a thousand households indicated that people who paid with card had a lot of impulsive and unhealthy food items in their basket. On the other hand, people who paid with cash spent less and had a healthy proportion of products in their basket. It turns out grocery shopping with cash promotes healthy eating! Paying with card or contactless like Apple Pay may seem to make spending painless… but they encourage impulsive buying behavior and overspending.
Managing money is not only about how you spend it but also how you choose to pay. As we have mentioned before using cash can be a great way to avoid overspending. You can carry a certain amount of cash on you and stop spending when your wallet is empty, which will definitely help you budget.
There may be some factors in your life where using cash as payment might not be allowed, such as bills, health insurance and car insurance. Don’t panic because this is okay, with your standing orders you will be aware of exactly how much is being paid out meaning you are still achieving your money management goals. If your goal is to be financially stable, long term, then it’s important to control your expenses and we believe the most successful way of doing this is to adapt to the lifestyle and become more aware of the value of cash.
Organise your spending
Arrange your household finances into two categories: without cash and with cash. What on Earth are we talking about? Let us explain…
- Without Cash: These are factors in your life that are paid via your bank account because the money might need to go straight into someone else’s account or it might be a large amount of money, or just on a general weekly/monthly basis. This includes things such as: WI-FI, rent/mortgage, health insurance, car insurance, heating, water and electricity bills, etc. So they are the fundamental necessities in life. Always keep a close eye on these payments to make sure they’re consistent with numbers and dates.
- With Cash: Simply the ones that you can easily pay with cash straight up one-time purchases. For example, things such as: weekly groceries, shopping, takeaway food / in a restaurant, petrol, etc. Make sure you always have some cash on your just in-case!
Save yourself the pain of spending too much, take charge of your money.
Withdraw cash you need
Adapting to a mainly cash lifestyle (except the standing orders mentioned above), is a strategy that will help you to keep an eye on your money. If you want to focus on cutting your grocery bill, set a budget of how much you want to spend on food for the week or month and withdraw that amount of cash from the nearest ATM.
Kathleen Elkins set herself a challenge of allowing herself $60 a week to live on, find out if she managed, what her strategy was and if it benefited her in this article.
We’re hoping this blog helped you to learn the value of cash and allow you to take control of your expenses. With cash being the main subject in this blog we thought you might benefit from learning a few fun facts about cash that you probably didn’t know!
So how many times a week do you use cash? Does it stop you from buying things you don’t need? Let us know via twitter!