Making the Shift to Living with Cash


You will spend more when you pay with plastic — from 30 to 200 percent more, depending on which study you read.

Banks and retailers benefited greatly over the past decades by promulgating the cashless lifestyle. They convinced us that it’s much safer to carry plastic and more convenient, too. Cash, they declared, is old-fashioned and clunky. Plastic is hip and cool. Gradually, Americans fell for the pitch and, in turn, got more than we bargained for. Going cashless has turned us into a debt-ridden society.

But things are changing on the consumer front. Cash is making a comeback.

Some people, like reader Martin B., are moving to cash to avoid credit-card companies, collection agencies and others. Susan J. and her husband wrote that they’ve closed their bank and credit accounts because of past problems with overdraft charges and identity theft.

Still others like Bill and Jan W. are using money orders to pay bills. They cash their paychecks at their company credit union because it doesn’t impose high fees like check-cashing stores.

All of these people have gone to cash to avoid specific problems. But there’s another reason—perhaps even more noble than any other — that individuals are making the shift to a cash lifestyle: To reduce spending and improve savings. 

Countless studies have proven this fact: You will spend more when you pay with plastic — from 30 to 200 percent more, depending on which study you read. Paying with plastic makes it a lot easier to make unplanned purchases. Cash, on the other hand, is unbending. You simply cannot spend more than you have.

Making the shift from plastic to cash doesn’t mean closing your credit accounts. It means depending on cash, not plastic, for your day-to-day spending. It means planning ahead, shopping with a list, paying attention to what things cost, and often making tough choices required by the amount of cash you with you at the moment. You need a variety of active credit accounts to maintain an excellent credit score. But you don’t have to use them on a daily basis.

There are so many benefits to making the shift from a plastic mindset to a cash lifestyle. Living with cash improves your character because it requires personal discipline, accountability and responsibility. Cash promotes delayed gratification and discourages feelings of entitlement.

Here’s a simple way to make the switch reliance on plastic to dependence on cash. Get a stack of envelopes and write your various spending categories like food, gas, dry cleaning, kids, and so forth— one category on each envelope. Cash your next paycheck, leaving enough in the bank to cover those bills you mail or pay online. Divvy up the cash between the envelopes putting the amount you will need into each for groceries, gasoline and so on. Leave the at home, and spend from the envelopes. When an envelope gets empty, no more spending in that category until the next fill-up.

At first you’re going to feel as if you’ve jumped into the deep end of the ocean without your water wings. But slowly, one day at a time, you’re going to find your stroke and that gentle rhythm of freedom that living with cash can give.

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