Many of us, especially the younger generation, are heavily dependent on cashless payment methods. As convenient as they are, this form of payment can actually wreak havoc on your finances. Without control and discipline, you can end up with a lot of debt and interest.
To avoid these inconveniences, try to avoid using your card. Here are some Advantages of paying with cash to convince you.
1. Cash feels more real
Earlier this year, the author Gretchen Rubin Ask her social media followers which payment method feels more authentic to them. Their responses showed that people generally feel a deeper connection to cash purchases.
Research by Avni M. Shah, Assistant Professor of Marketing, University of London University of Toronto Scarboroughsupporting this theory. Similar to how casinos exchange cash for chips at the gaming table, hiding your balance behind a card can psychologically devalue your bank balance.
By using cash, you’ll be more aware of where your money is going and how much you have left. Cash brings transparency to your finances. It breaks you out of the vicious cycle of shopping and paying interest.
2. Cash encourages smart spending
Buying with cash allows you to focus more on what you’re buying. Because you’ll be paying with your hard-earned cash, you’ll likely spend more time weighing price, warranty, and other features.
On the other hand, paying with a card can lead to impulse purchases. You might even end up buying items you don’t really need.
See also: Thoreau’s Guide to Living More with Less
3. There is no charge for cash payment
Credit cards carry interest, and companies often charge additional fees for purchases. Some businesses even pass on merchant card processing fees to consumers.
Over time, your credit card payments can increase and cause a strain on your finances. If you end up missing a payment, you’ll lose more money in fees. If you fail to resolve your dues immediately, you may end up with a lawsuit filed against you in court.
4. Cash purchases mean more
Paying cash for items increases your emotional attachment to the purchase. For example, if you don’t have enough money to buy a PS4, you’ll have to save up to buy it. This makes the PS4 even more valuable to you.
However, when you use your credit card, you’ll feel instantly satisfied. Soon enough, you’ll be focused on buying other things.
See also: 7 common money mistakes to avoid (and their simple solutions)
5. You can’t spend cash you don’t have
One of the biggest drivers of consumer debt is people spending money they don’t have. In fact, overspending was a major factor in the mortgage bubble bursting in 2008.
Many people shop today only to worry about paying later. This is a toxic and unsustainable way to live.
Using credit cards hinders our ability to save, reduces our net worth, and can lead to serious debt.
By paying with cash, you’ll get a visual representation of how much money you actually have. It will help you start living within your means, which is a beautiful thing.
These are the benefits of paying with cash that motivate me to avoid credit card transactions. If you’re still not completely convinced, it might be time to rethink your financial strategy.
