No doubt you’ve seen and used some of the new £5 notes by now. You may even have a few in your wallet or purse. Soon, we’ll get new £10 notes too, and of course we also have the new £1 coins in circulation now as well.
Given the many headlines we’ve seen recently about these new developments in the world of cash (namely designed to last longer and be harder to forge), you’d be forgiven for thinking none of us ever used credit and debit cards. So, we thought we’d delve into the question of whether cash is better, or whether card payments are better.
This could be a very long article, so we’re restricting it to our own experience of using both cash and cards to pay for things. And we noticed something that really stood out.
It’s easier to stick to a budget when you spend in cash
Consider this. Let’s say you’ve worked out a budget and you find you can spend, say, £80 a week on your food shopping for a family of four. If you have a credit card and you take that with you to pay for your food shop, it is far easier to buy more than you intend to. After all, you know you can simply hand over your card at the till to pay for it.
Compare this to paying in cash. If you know you only have £80 in your pocket and a budget you must stick to, you can make sure you add up as you go along and do everything you can to stick to it. Otherwise, you will end up putting things back at the checkout – and no one wants to do that.
It’s harder to spend frivolously when you spend in cash, too
If you are out shopping and you see a sweater you like (or a coat, or a new book, or anything else that would grab your interest), you could do one of two things. You could whip out your credit card, pay for it, and worry about paying it off later. Or, you could take out some cash.
And that’s when you see the real cost of what you are buying. When you pay in cash, you must pay immediately. There is no delaying of the payment to the point when the credit card bill comes in. This makes it harder to justify purchases. It also makes it easier to prevent any frivolous spending you might be tempted into, and easier to make sure you live within your means.
Many people would probably say card payments are the way of the future. They’re easier, as you can just tuck a card into your pocket and you’re able to pay for whatever you like. But there is a hidden cost involved if we are not careful.
So, if you are trying to stick to a budget, try using cash – and only cash – even if only for a week. You might be surprised at the benefits.