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The Great Cash Experiment: Is Paying with Cash Really Better?

Cash money
Image by jenn_jenn

So, I don't really like cash. It's dirty. It's inconvenient. It's heavy. (I'm originally from Canada, and when I lived there we had one and two dollar coins that were respectively called loonies and toonies. Don't laugh. Think of the backache you'd get from carrying THAT stuff around.) Besides, carrying cash is risky! I could be mugged! (Ahem. I live in a small town in Georgia.)

Plastic. It's so much nicer, no? It's pretty clean. It doesn't hurt my back. Well, I suppose it's still risky. I suppose I could still be mugged--aside from the fact that I do live in a small town in Georgia.

I've always heard that you should pay cash for things. You know Dave Ramsey and how he preaches. But I figured that using a debit card was just as good. Until recently. You know how sometimes you get a flurry of info from different sources on the same topic? And you figure maybe you should listen up?

Well, I kept hearing that using plastic--even a debit card--resulted in higher spending than paying with cold, hard cash. You know the stuff made of paper and metal. (It's been so long since I've seen some that I'd nearly forgotten, too.) I heard it from Dave, Meredith, and then Crystal. In fact, they were saying that consumers spent 12-18% more when they used any form of plastic. Hmmm. Could that be where those extra pennies dollars were going each month?

I decided to bear the (ahem, literal) burden of carrying cash for a while and see what happened.

Enter the Great Cash Experiment:

1. I decided to use cash for the most obvious variable expenditures.
We're a pretty basic family when it comes to spending. I have a grocery category and a "miscellaneous" category. The miscellaneous category covers toiletries, birthday gifts for others, stamps, and overdue fines at the library for the book that has fallen into a black hole in our house. You know, miscellaneous stuff. The kind of stuff that can really eat away into your budget if you're not watching.

2. I put the debit card away and gave my cash assigned spots.
I found that I had to put my debit card out of sight. Out of habit, I was still reaching for it without thinking. I'm considering leaving it at home entirely, but I'm not there just yet. Right now, it's in an out of the way spot in my purse. I'd given my old wallet to the boys to play with, but stole it back since it had handy dividers in it for my different cash categories and a spot for change. Levi cried for a minute and I felt guilty, but we all recovered. I promise I'll be on the lookout for another wallet for them to play with!

3. Online purchases were deducted from my cash.
These days I buy a LOT of stuff online. We needed some homeschool materials that I purchased online. I used my debit card for that, but then immediately took the cash out of my wallet and set it aside as though it had been spent.

4. I readied myself for the big test--the grocery store.
Every week most of my variable budget is spent at the grocery store. I've been working with a budget, but if what everyone said was true, I was still spending more than I would if I paid with cash. So. I counted my cash and meticulously counted my grocery costs as I went through the store. How embarrassing would it be to not have enough money to pay for my groceries?!

I know I spent less! There was an online purchase I didn't make because I realized that, although the purchase was small--only a few dollars, I might be cutting my budget a little short for next week. I saw the biggest difference at the grocery store. I found myself asking, now do I really need this for that recipe or could I do without it? I looked harder for smaller packages of meat and discounted produce. These are things I do sometimes, but I paid much more attention knowing I had a limited amount to spend.

Spending with cash brought a reality to spending that just wasn't there with plastic. It "hurt" more to lay out my paper and metal (yes, I even used a few pennies to pay for my purchase). In short, this experiment was a success. Your back might hurt a little more, and if you get mugged, don't say I didn't warn you, but your budget will be in a healthier place for the risk.

For more tips about seeing your cash flow grow--visit We Are THAT Family!


Donna(mom24boyz) said...

I so agree that carrying the cash is a pain. For us getting it withdrawed is a pain. We just need to get into the habit of withdrawing the needed cash every two weeks on pay day. The times I have done it with cash I have stayed in budget much better. When I don't ...it almost never fails that I go over a bit.

faraboverubies said...

I am so scared to do this! I hardly ever carry cash. I know it makes sense what you are saying, and I need to try it.

Brianna @ Heart(h) Management said...

I know what you're saying--it IS hard to remember to get the money withdrawn, but I think I'm seeing enough benefit to make the effort. Really, it's not *that* big of a deal--just seems that way to me.

Suzanne said...

I carry cash and I, too, live in a small town in Georgia! :) I just don't carry a *lot* of cash. I definitely spend less using cash than a credit card or even than writing a check. Once you get used to cash, it's actually easier.

Anonymous said...

i am agreeing with you on carrying cash, brianna!
when i was growing up, my parents used an envelope system, so it was not at all foreign to me when i read dave's book. when chris and i got married i assumed that's the way we would deal with our finances too--cash for everything. turns out it has taken us 12 YEARS to discover cash. but i really like it. yes, i often forget to get the cash out which is why i too cannot leave my debit card at home. but paying cash has a sense of satisfaction that comes with it--like i've actually PAID for my purchases. and i DO spend less. my parents still use cash for everything and have never had a debt problem!
(HOTH and cherishingmydays.blogspot.com)

Erin said...

DH and I did this for quite a while when we were first married - we've recently gotten out of the habit. I think it would be an EXCELLENT habit to get back into.
:) Erin
-with my aching back toting my loonies and toonies! ;)

Brianna @ Heart(h) Management said...

@Erin--yep, you'd really have an aching back, wouldn't you?

@Steph--interesting about your parents. You simply avoid debt when you only have cash, right?

@Suzanne--So. Have you ever been mugged? LOL.

Amanda said...

I think using cash or not depends entirely on the individual. I find that I spend more if I use cash. I know that probably sounds weird, but it's true.

One other reason that I use my debit card as much as possible around town is because my credit union offers points for rewards.

For example, for every $3 I spend, I earn 1 point. Then with the points, I get free gift cards to stores or restaurants, such as Lowe's, JC Penney, Olive Garden, Red Lobster, and many others.

In the last three years, I have received enough points for $250 worth of gift cards. That may not sound like much over a three year period, but hey, it's like free money.

However, as a side note, I never use my debit card for online purchase. I use a regular credit card. Here is a web address to help explain why it is safer to use a credit card online:


Brianna @ Heart(h) Management said...

Wow--thanks for the heads up, Amanda. I did some checking into it, and despite the facts I found on the site you linked, I also seemed to find that the card I use (Visa) has a zero liability policy. I'm going to check into it more though to make sure.

As far as credit working for you--great! Knowing myself like I do, I think that the risks outweigh the benefits for our family when it comes to credit card reward programs. But I know some families do really well like you are doing!

Brianna @ Heart(h) Management said...

Well, after looking a little more, it seems that although Visa DOES have a zero liability policy, it's not federal law like it is with the use of a credit card. So, there is at least a margin of greater risk with the use of a debit card. Something to definitely keep in mind.

liz said...

We switched to cash a little over a year ago and it did seem a little inconvenient at the time, but the benefits are worth it. I know for a fact we spend at least $100 less per month this way.

Amy Platon said...

And hooray for spending less, and you got a workout too! Bonus!

Buffie said...

I stick with cash too and it really does help keep my spending under control. When the cash is gone we can't spend anymore that week.

Talya said...

Hi Brianna -

found a great site about how to feed a family of 5 for $50 a week - check it out -


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