Years ago, before credit and debit cards became so prolific, consumers bought with cash. While some of the more expensive purchases were made with a check or a credit card, the overwhelming payment for goods and services was cold hard cash.
Thanks to technology, payments have switched to being mostly credit and debit card based and rarely are purchases made with cash.
While there are advantages to using credit cards instead of cash, there are three distinct benefits that going all cash provides. And these benefits can have a major impact on your finances.
3 Huge Benefits of Using Cash
#1. Spending Control
When you buy everything with a credit card, you can very easily get yourself into trouble by spending more than you have. Take it from me, as I have firsthand experience with this. I am sure many reading this have also opened up a credit card statement and thought, “wow, I spent that much?!”
When you don’t see the cash leaving your pocket, it is easy to spend more than you have. We tend to forget about a purchase here and there when wanting something new. When the credit card statement comes, we quickly remember those purchases we selectively forgot about.
For most people, this isn’t a big deal. But for others, it can be. Before you know it, you could be looking at a mountain of credit card debt that you now have to dig yourself out of.
If you pay for everything with cash, you never have to worry about getting yourself into credit card debt. It just isn’t possible.
So save yourself the headaches and stress and just pay with cash.
#2. Easier To Budget
When you use all cash, it is much easier to set up and follow a budget. You can use the envelope system, where you place cash in various envelopes, each with its own purpose. When the envelope is empty, you can’t spend anymore in that budget category.
Or you could use a modified version of this system. You can overspend in one category, but you have to take money from another category that has a surplus of cash and use that cash to cover your overspending.
I will give credit to the credit card companies however as they have started to categorize your purchases for help with this issue.
However, it is far from perfect. You may pick up a quick snack from the gas station while getting gas and have your credit card company lump that in with gas instead of dining out.
What’s stopping me is the cash back I get for using my credit card. We charge most everything and ALWAYS pay our card in full each month. By doing so, we incur no finance charge (also, our card has no annual fee) but get back $200-$300 per year. I’ve done the all-cash thing and totally believe in only buying what I can afford to pay for in full (new car included) but using my credit card nets me extra cash.
I love the only-cash philosophy. While we do use our debit cards, we do our grocery spending with only cash – for the very reasons you listed. We’ve been able to save and control our spending much better by using cash. Thanks for sharing.