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3 Reasons Budget-Conscious People Use Cash

Posted by Rebecca Hellmann on Jan 16, 2020 6:45:00 AM

There are plenty of reasons to swear by your debit card or mobile payments application over hard currency. I don’t know about you, but my favorite restaurants rarely let me pay on pick-up when I order food. And the local grocery delivery and pickup programs don’t accept cash.

using-a-cash-budgetUnfortunately, staying on a budget sometimes means trying something different. Here are three reasons for using cash as a way to keep you on track.

  1. People spend more when they use credit, debit, or mobile payments.
  2. Discover where your budget has been leaking.
  3. Improve conscious spending.
Avoid Overspending

A study from MIT discovered people would spend up to 100% more money when using a card than when they pay in cash. McDonald’s has reported its average ticket for cash users is $4.50. The average for non-cash users is $7. Even states with highway tolls have found they can charge more for electronic payments over cash.


There are two reasons for this phenomenon. First is the simple fact that there is a finite amount of money you can spend when you pay with cash. When you only have $25, you are very conscious that you have no way of covering any overage. As a result, you are more likely to spend less than the amount you have on hand to be sure you can make the purchase. If you are paying with your credit, debit card, or mobile, you are far less aware of the amount of money you are spending – even if you have a specified maximum in mind.

The second reason for overspend with non-cash payments is the phenomenon known as “coupling.” Coupling is the association between an activity or purchase (part A) and the actual payment (part B) for that item. An increase in the time between part A and part B creates a disassociation between the two activities. For the person paying with credit card, debit card, or mobile, the action feels much closer to not having to pay. Using cash ensures an accurate coupling of part A and part B, making you more aware of the amount you are spending and how it affects your budget.

Discover Where Your Budget is Leaking

The increased association between what you purchase and expense can be a real eye-opener. Where extra driving, a new shirt, or additional snacks may have previously been tempting, the definitive endpoint cash provides will likely make you think twice about what you can afford.

Even if you do not choose to continue using a cash-only budget, selecting a few months a year to only use cash can help you pinpoint your weak points. Recognizing where you are straying from your budget plans can assist you when you realign your budget and help you be more aware of where your money is going.

Improve Conscious Spending

The real point of a budget is to encourage conscious spending by imposing constraints. Putting constraints on the amount you can spend in any given category is supposed to empower you to ask questions about what you are buying. Questions like:

  • Will I use this?
  • Can I get this less expensive somewhere else?
  • Why am I buying this?
  • Is there something else on which I should be spending this money?
  • Can I wait to buy this?

The additional constraints of using cash help reinforce this idea of conscious spending. The result is a heightened awareness of how and what you buy.

While there are many reasons non-cash payments are preferred by a growing majority of consumers, using cash provides a variety of benefits many don’t see. Once you see the results, that extra minute at the checkout becomes less of a hassle and more of a personal reality check.

Topics: consumer budgets, money management, household budgets, financial education


Written by Rebecca Hellmann

Rebecca Hellmann has been researching and writing in the payments technology industry for over six years. Prior to the payments industry, Rebecca developed marketing, branding, and content for businesses such as Bil-Jac, Benjamin Franklin Plumbing, and Homestead Furniture. She currently works as Director of Marketing for FCTI, Inc.
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