In an environment where consumers have more options than ever available to them when they pay for goods and services, good old-fashioned cash may seem like something of an outdated option. But despite the rise of digital and mobile alternatives, notes and coins around the world aren’t going anywhere any time soon.
There are, of course, a wide range of reasons why people still appreciate cash. It’s simple, familiar, ubiquitous and secure. But one campaign promoting the benefits of this form of payment suggests another reason why people may favor physical currency – it could be good for your financial and mental health.
Managing financial stress with cash
It should be no surprise that managing finances is among the leading causes of stress for many people. In fact, a recent study by the Center for Financial Services Innovation claimed almost half of Americans (48 percent) say their finances cause them stress due to their outgoi11ngs exceeding their income. What’s more, 46 percent of employed Americans said they usually run out of money between paychecks – another cause of serious financial stress.
But according to the ATM Industry Association (ATMIA), paying in cash could be one solution to this, as it will help people take back control of their spending and ensure they are not living beyond their means. This in turn leads to better financial security and better overall well-being.
A blog post on behalf of the organization’s Withdraw Cash Wednesday campaign stated: “A cash lifestyle forces you to evaluate what you truly need. And, with practice and discipline, you can sleep better at night knowing where every dollar is going, reducing stress and anxiety.”
A better way to budget?
It’s certainly true that relying primarily on notes and coins can give people improved awareness of their money and make them pay close attention to their spending habits. Handing over physical cash at the checkout carries a connection that doesn’t exist in the same way as with card or mobile payments.
When using digital solutions, consumers don’t feel the money leaving their account in the same way they do when they’re taking cash out of a wallet or purse, and this can have a notable impact on the way they approach spending and saving.
Withdrawing cash from an ATM at the start of the week to use on planned purchases also helps people budget better. The ATMIA stated that having a set amount in their pocket to spend helps people stick to their intended plans and teaches them how to adjust their spending to meet financial goals such as saving for bigger purchases.
Indeed, the organization observed that one consequence of using cash is that it reduces the temptation towards ‘impulse’ buys, as it makes it harder for people to spend money they do not have, or that which would otherwise go into longer-term savings.
While most people consider these purchases to be fairly inconsequential – a cup of coffee here or an extra treat there – they can easily add up. The ATMIA also noted that one in five consumers in the US has spent more than $1,000 on an impulse buy.
When combined with cash’s other benefits, this ability to help people get more control over their money and reduce the stress caused by financial matters may be a compelling reason for many people to embrace cash. With worries surrounding growing debt continuing to be a major factor in many people’s thinking, turning to cash can play a key role in tackling this.
Therefore, banks need to make sure they’re helping to achieve this by making it easy for people to access cash, be it at a branch or ATM, when they need it, and providing clear information on people’s financial health to show the impact such effort may have.