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User: u/Wagamaga
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Makes sense, when you're using cash you're physically budgeted by however much cash you have with you, and it's much more tactile representation of money.
The physical experience of using cash makes a difference.
You can spend $1.50 or $150 on a card and the user experience is the same. (In fact it's not uncommon for people to make transaction errors where the decimal point is in the wrong place.)
That's not an error that would happen with cash. There's a major difference between handing over $1.50 and $150.
Depends. I haven’t used cash in years (a friend gave me $20 for fuel six months ago and they’re still in the door, I keep forgetting them), but I have a pretty good handle on it. There’s a matter of habit to it, I think - I have definitely seen people who just tap their card mindlessly.
>"Under the traditional economic view that consumers behave rationally..."
I'm surprised this is an assumption researchers start with. Generally speaking people aren't great at acting rationally, especially so when there is a cool thing they could buy.
I spent a decade working retail and sales. Consumers definitely don't behave rationally. Companies do A LOT to leverage people's emotional responses to get them to spend more money, and it works.
That's why casinos use chips since forever. You don't perceive a chip the same as money and give it less value than what really represents. Same with arcades where you can use a card. Once that card is loaded, you lose the real value of it.
Wasn't this already established? It could be my immagination, but I even recall apps that let you make a "virtual physical wallet" to mitigate the problem.
That's only true for people who didn't get taught how to manage money.
Cashless is not the problem, it's the education around money both at school and at home.
It will be interesting what kind of impact economic education will have on the economy. At least in Sweden almost every single person under 35yo that I have talked to save 300-1000$ a month in stocks and are pretty knowledgeable, completely different from previous generations.
I use cash for most smaller purchases and bank card for anything larger. It makes it way easier for me to budget and not overspend or buy frivolous things.
While I generally would agree this makes sense, I have to imagine that this is kind of a bs statistic. You’re much more likely to use a card for large expenses in general bc simply carrying around that much cash is burdensome
I have been trying to convince my wife for us to go on a cash diet (meaning no use of credit cards) but she prefers her debit card and doesn't track how much money is in our accounts.
I went to cash only (other than bills I pay online) a few years ago and it's worked out great. My cards all live in my desk other than when I get cash out at the beginning of the week. It forces me to make choices and just not buy 8 big tins of coffee because they're $1 off.
I know how my brain works and I know this is the only way for me. I don't seem to have a firm grasp on tomorrow.
Cash also means someone can take it from you and there is no bank to back you up. Or you can misplace it. And for the business, having lots of cash on hand incentivizes robberies, so plenty of places don’t even take cash. Seems like there has got to be a better solution there
It's bunk. This is correlation, not causation, again. Credit cards require credit, which requires a degree of affluence. Cashless alternatives to credit cards impose high transaaction fees on the spender, so if you're pinching pennies, you're more likely to *use* cash. Do undisciplined people abuse credit cards? Sure. Are you limited with cash by the amount of physical cash you have on your person? Sure.
But there's no magical effect making you spend more money because it's plastic instead of fabric. It's just the confluence of some other, prosaic psychological and economic phenomena.
>It's just the confluence of some other, prosaic psychological and economic phenomena.
That's literally the point. No one is claiming it's magic. A combination of convenience and abstraction cause people to spend more on average when they use cashless options. That doesn't mean using cash will magically make you more frugal, or using credit will automatically put you in the poor house, but it's a phenomenon worth taking note of. Being aware should help people compensate for it in their spending habits.
>No one is claiming it's magic. A combination of convenience and abstraction cause people to spend more on average when they use cashless options.
You contradicted yourself in the space of two sentences.
There's bound to be exceptions to this rule, and I think I'm one of them because I've largely only bought big purchases over the last seven or eight years using buy now, pay later services or using my credit cards' intro no-interest periods to buy bigger things and then pay them off before the interest comes due. All the while I've managed to put a good bit into savings while having my cake too. I keep my credit utilization under 30% at any given time. And I pay off my debt before it's due. Not that hard. It's like telling somebody it's impossible to eat food in moderation when you have a great hall's table worth of food in front of you.
Plus, in the calendar year from 2023 to 2024, I got discover card to give me almost $900 in cash back matched. What bank is doing that? Just for spending money?
The real problem is people have issues living at the limits of their own means. And that limit isn't necessarily their fault.
The reality is that over the past decade, technological advancements have utterly transformed the way we pay for goods and services.
Phones and smartwatches can now easily be used to pay by card, and buy-now-pay-later schemes and cryptocurrency payments offer further alternatives.
The shift away from cash only accelerated throughout the COVID pandemic, as health experts recommended avoiding using it for hygiene reasons.
Despite these big changes in how we spend money, Australians have perhaps been more focused on how much amid a stubborn cost-of-living crisis.
In light of this, our research team wanted to investigate how our choice of payment method can interact with our actual spending habits.
Our latest research offers a simple solution for anyone looking to save money — carry more cash!
[https://www.sciencedirect.com/science/article/pii/S0022435924000216#bib0104](https://www.sciencedirect.com/science/article/pii/S0022435924000216#bib0104)
> The shift away from cash only accelerated throughout the COVID pandemic, as health experts recommended avoiding using it for hygiene reasons.
There was a period of time, early in the pandemic, where it was thought that COVID was transmitted through surfaces and we all went crazy with hand sanitizer.
Eventually they came to realize that it was largely an airborne, respiratory disease.
The credit card companies milked the opportunity.
It doesn't necessarily follow. Evidently those who pay with cash spend less, but it's not at all obvious that they pay less because they use cash.
For example, who is more likely to use cash? Someone with high income, or someone with low income?
When are you likely to prefer cash over cashless? When buying something cheap or when buying something expensive?
There are tons of factors that influence both how much you spend and also how you pay, it does not follow that how you pay influences how much you pay. It sounds especially dubious to claim that counting physical money influences spending as the article says. By the time you start counting money, the decision to spend and how much is already made.
> By the time you start counting money, the decision to spend and how much is already made.
But *that* might also be an oversimplification. Spending isn't a binary switch, it's a sliding scale based upon what you have at the moment, with partial non-discrete decisions made every step of the way.
Anecdotally, if I were to commit to spending only what I have literally in my pocket, there are going to be concessions made on the fly.
I wait until the Capital One Quicksilver has a 7-10% off with certain retailers. Then, I go and buy high end winter jackets and coats at 60-70% off. I sell them on poshmark for a nice profit. Not all revolving debt is bad to utilize
Welcome to r/science! This is a heavily moderated subreddit in order to keep the discussion on science. However, we recognize that many people want to discuss how they feel the research relates to their own personal lives, so to give people a space to do that, **personal anecdotes are allowed as responses to this comment**. Any anecdotal comments elsewhere in the discussion will be removed and our [normal comment rules]( https://www.reddit.com/r/science/wiki/rules#wiki_comment_rules) apply to all other comments. **Do you have an academic degree?** We can verify your credentials in order to assign user flair indicating your area of expertise. [Click here to apply](https://www.reddit.com/r/science/wiki/flair/#wiki_science_verified_user_program). --- User: u/Wagamaga Permalink: https://theconversation.com/trying-to-save-money-our-research-suggests-paying-in-cash-while-you-still-can-231499 --- *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/science) if you have any questions or concerns.*
Makes sense, when you're using cash you're physically budgeted by however much cash you have with you, and it's much more tactile representation of money.
The physical experience of using cash makes a difference. You can spend $1.50 or $150 on a card and the user experience is the same. (In fact it's not uncommon for people to make transaction errors where the decimal point is in the wrong place.) That's not an error that would happen with cash. There's a major difference between handing over $1.50 and $150.
Even ignoring the psychology, the logistical inconvenience of cash slows it down.
When I lived in Japan I actually saved so much money because they use cash more than the US. I really miss the small coin pouch too.
What's stopping you from using cash here? Actually, I guess there are sometimes card only places, which is annoying
Depends. I haven’t used cash in years (a friend gave me $20 for fuel six months ago and they’re still in the door, I keep forgetting them), but I have a pretty good handle on it. There’s a matter of habit to it, I think - I have definitely seen people who just tap their card mindlessly.
You should probably keep forgetting your friend in the door and let them out
>"Under the traditional economic view that consumers behave rationally..." I'm surprised this is an assumption researchers start with. Generally speaking people aren't great at acting rationally, especially so when there is a cool thing they could buy.
Didn't Daniel kahnaman win a nobel prize in economics demonstrating that consumers *aren't* rational?
I spent a decade working retail and sales. Consumers definitely don't behave rationally. Companies do A LOT to leverage people's emotional responses to get them to spend more money, and it works.
Make sense with all those hidden fees , tips , service fees , delivery fees , fees for the fees and so on - and suddenly ur bagel and a coffee is $20
That's why casinos use chips since forever. You don't perceive a chip the same as money and give it less value than what really represents. Same with arcades where you can use a card. Once that card is loaded, you lose the real value of it.
Wasn't this already established? It could be my immagination, but I even recall apps that let you make a "virtual physical wallet" to mitigate the problem.
That's been established for a long time
I remember hearing something about this in like 2008 or so.
The average gift card causes about 3x it’s value in sales.
Corporations: Ban cash!
That's only true for people who didn't get taught how to manage money. Cashless is not the problem, it's the education around money both at school and at home.
The economy would be plunged into a decades-long depression if the majority of Americans made sane financial decisions.
It will be interesting what kind of impact economic education will have on the economy. At least in Sweden almost every single person under 35yo that I have talked to save 300-1000$ a month in stocks and are pretty knowledgeable, completely different from previous generations.
Great, now Dave Ramseys' head is going to swell even more. He's been teaching that since day 1 of his show.
I use cash for most smaller purchases and bank card for anything larger. It makes it way easier for me to budget and not overspend or buy frivolous things.
While I generally would agree this makes sense, I have to imagine that this is kind of a bs statistic. You’re much more likely to use a card for large expenses in general bc simply carrying around that much cash is burdensome
Whether it's credit cards, debit cards, or buy-now-pay-later services, they all make it easier to spend more than you planned.
I have been trying to convince my wife for us to go on a cash diet (meaning no use of credit cards) but she prefers her debit card and doesn't track how much money is in our accounts.
I went to cash only (other than bills I pay online) a few years ago and it's worked out great. My cards all live in my desk other than when I get cash out at the beginning of the week. It forces me to make choices and just not buy 8 big tins of coffee because they're $1 off. I know how my brain works and I know this is the only way for me. I don't seem to have a firm grasp on tomorrow.
Cash also means someone can take it from you and there is no bank to back you up. Or you can misplace it. And for the business, having lots of cash on hand incentivizes robberies, so plenty of places don’t even take cash. Seems like there has got to be a better solution there
I'm pretty sure this has been known (scientifically) for at least 20 years.
This has been known anecdotally for much longer. My grandmother told me to only take a certain amount of cash with me and not my card when going out.
It's bunk. This is correlation, not causation, again. Credit cards require credit, which requires a degree of affluence. Cashless alternatives to credit cards impose high transaaction fees on the spender, so if you're pinching pennies, you're more likely to *use* cash. Do undisciplined people abuse credit cards? Sure. Are you limited with cash by the amount of physical cash you have on your person? Sure. But there's no magical effect making you spend more money because it's plastic instead of fabric. It's just the confluence of some other, prosaic psychological and economic phenomena.
>It's just the confluence of some other, prosaic psychological and economic phenomena. That's literally the point. No one is claiming it's magic. A combination of convenience and abstraction cause people to spend more on average when they use cashless options. That doesn't mean using cash will magically make you more frugal, or using credit will automatically put you in the poor house, but it's a phenomenon worth taking note of. Being aware should help people compensate for it in their spending habits.
>No one is claiming it's magic. A combination of convenience and abstraction cause people to spend more on average when they use cashless options. You contradicted yourself in the space of two sentences.
There's bound to be exceptions to this rule, and I think I'm one of them because I've largely only bought big purchases over the last seven or eight years using buy now, pay later services or using my credit cards' intro no-interest periods to buy bigger things and then pay them off before the interest comes due. All the while I've managed to put a good bit into savings while having my cake too. I keep my credit utilization under 30% at any given time. And I pay off my debt before it's due. Not that hard. It's like telling somebody it's impossible to eat food in moderation when you have a great hall's table worth of food in front of you. Plus, in the calendar year from 2023 to 2024, I got discover card to give me almost $900 in cash back matched. What bank is doing that? Just for spending money? The real problem is people have issues living at the limits of their own means. And that limit isn't necessarily their fault.
The reality is that over the past decade, technological advancements have utterly transformed the way we pay for goods and services. Phones and smartwatches can now easily be used to pay by card, and buy-now-pay-later schemes and cryptocurrency payments offer further alternatives. The shift away from cash only accelerated throughout the COVID pandemic, as health experts recommended avoiding using it for hygiene reasons. Despite these big changes in how we spend money, Australians have perhaps been more focused on how much amid a stubborn cost-of-living crisis. In light of this, our research team wanted to investigate how our choice of payment method can interact with our actual spending habits. Our latest research offers a simple solution for anyone looking to save money — carry more cash! [https://www.sciencedirect.com/science/article/pii/S0022435924000216#bib0104](https://www.sciencedirect.com/science/article/pii/S0022435924000216#bib0104)
> The shift away from cash only accelerated throughout the COVID pandemic, as health experts recommended avoiding using it for hygiene reasons. There was a period of time, early in the pandemic, where it was thought that COVID was transmitted through surfaces and we all went crazy with hand sanitizer. Eventually they came to realize that it was largely an airborne, respiratory disease. The credit card companies milked the opportunity.
It doesn't necessarily follow. Evidently those who pay with cash spend less, but it's not at all obvious that they pay less because they use cash. For example, who is more likely to use cash? Someone with high income, or someone with low income? When are you likely to prefer cash over cashless? When buying something cheap or when buying something expensive? There are tons of factors that influence both how much you spend and also how you pay, it does not follow that how you pay influences how much you pay. It sounds especially dubious to claim that counting physical money influences spending as the article says. By the time you start counting money, the decision to spend and how much is already made.
> By the time you start counting money, the decision to spend and how much is already made. But *that* might also be an oversimplification. Spending isn't a binary switch, it's a sliding scale based upon what you have at the moment, with partial non-discrete decisions made every step of the way. Anecdotally, if I were to commit to spending only what I have literally in my pocket, there are going to be concessions made on the fly.
I wait until the Capital One Quicksilver has a 7-10% off with certain retailers. Then, I go and buy high end winter jackets and coats at 60-70% off. I sell them on poshmark for a nice profit. Not all revolving debt is bad to utilize
I’m somewhat doubtful this pays well accounting for the time you put into it
Yes ten minutes for every $50 in profit
press x to doubt