In a world of debit and credit cards, paying with cash could appear ridiculous. You likely enjoy the comfort of sliding your card at the checkout, however what if there was a better way? What if there was a way you might in reality save more money? In some situations, it may be best to pay with cold hard cash, instead. Here’s why:
The Advantages of Paying with Cash
Cash is fraud resistant.
When you hand your debit or credit card over to a waiter at a restaurant, you are taking a chance. Who knows whether they will try and steal your credit card information. Criminals often utilize something known as a “skimmer” which collects your card information in a matter of seconds. While Visa and MasterCard have consumer protections, you may still end up in a hassle with the fraud department of your credit card provider convincing them that you didn’t really make those unauthorized “surprise” purchases.
Cash, on the other hand, merely demands that you figure out how much change you’re due and that you get the right amount of it back. As long as you know basic arithmetic, it’s pretty fool proof.
You’ll spend less using cash.
There are psychological reasons why people spend less money using cash than credit. The comfort of utilizing a card signifies you’ll spend more frequently. Also, when you don’t have to hand over cash to the merchant, you don’t physically see money leave your pocket and enter theirs, which is really painless, making it an easy decision to “super-size” your meal.
It’s easy to stay within budget using cash.
If you have difficulty keeping track of transactions, using hard cash could help you stay within budget. Merely put cash into envelopes at the beginning of the month and only spend money out of those envelopes for the things the money is earmarked for. When you run out of money, you have nothing left to spend! In short, no more over draft charges.
You can incorporate the envelope method in your general budgeting system, and entirely use cash for categories where you are inclined to “overspend.”
Using cash cuts down on fees for the merchant.
Debit and credit cards contain fees that the merchant must pay. This cost gets passed on to you, which drives up the cost of goods and services. By using cash, you’re guaranteeing that the merchant that they don’t have to pay these unwanted fees. This, in turn, may motivate them to lower their prices to customers that pay cash versus by credit.
Cash has more negotiating power.
When you’re purchasing a car, appliance, or other big-ticket item, fanning out a couple of hundred dollar bills is quite the negotiation tool. You can use cash as an important visual motivator when purchasing from small mom and pop stores. See how much money you’ll be able to save by paying with cash!
As for my family, cash plays an important role in my financial management system. I save serious money by using it for a lot of of my discretionary expenses. I presently use cash for:
- Eating out
- Fun money
These are the areas where we are most likely to overspend our budget, so paying cash in these areas helps to keep us in check. What are some discretionary areas where using cash is likely to help you save money?
If you’re still not convinced that using cash in lieu of credit is the best thing for your budgeting plan, at least stick with a cash back debit card and keep off credit card use. With a debit card, you’re spending money you already have. Every time you use a credit card, you’re spending another person’s money. Even if you plan on paying off your credit card every month, there is still a risk that something unanticipated will up come up and you will end up paying high interest.
Do you use cash as part of your budgeting plan? How so? If you want to know the advantages and know why it still best to use cash here is helpful article that might give you the pay best idea and consider to Pay cash for Everything.