You may have heard the age-old saying that “cash is king”. But in 2024, with many businesses going cashless after the pandemic (and with the rise of everything from Venmo to Bitcoin) it may seem like the days of cash are indeed numbered. So, do you really need to carry cash?
The general verdict: It still depends on the situation.
The Advantages of Cash:
Cash has quite a few enduring strengths:
- Cash-Only Establishments: Ever put down a card only to have the waiter say “Sorry, we’re cash only?” Many restaurants, vending machines, garage sales and even some brick-and-mortar stores still prioritize cash, especially for smaller transactions. Studies show that cash is the go-to for purchases under $50, and some businesses, such as gas stations, will even encourage you to use it by offering discounts.
- No Data Breaches: For digital assets like cryptocurrency and online payment platforms like Apple Pay or Square, data breaches are a potential threat. Cash, however, is immune: Identity theft and hacking are not a risk.
- Privacy: Unlike most electronic payments, cash offers a layer of anonymity. It’s ideal for those who just want their privacy.
- Budgeting: For a tough budget, consider dividing your cash into envelopes for each of your budget categories such as groceries, utilities, clothing, eating out, entertainment and so forth. Then, when you find one of those envelopes empty, that’s it — you’ve used up your budget for that category.
The Disadvantages of Cash:
While cash isn’t without its merits, there are some potential drawbacks to consider:
- ATM Fees: We’ve all been in that situation where we need cash in a pinch. Using an out-of-network ATM can land you with hefty fees. Sticking to in-network ATMs or choosing accounts with fee reimbursement may help, but it requires planning.
- Budgeting, again: While cash does help with mindful spending, it also means you lose the convenience and data of budgeting apps. Consider using virtual envelopes within apps like GoodBudget to bridge the gap.
While digital payments and assets are undoubtedly on the rise, cash still holds its ground in specific situations. Cash shines for small purchases, privacy-conscious transactions, and situations where digital payments aren’t accepted. It can be a valuable budgeting tool, but lacks the tracking benefits of budgeting apps.
Ultimately, the choice is yours. Embrace the convenience of digital wallets, maintain a strategic cash stash, or find a balanced approach that works for you. Neither cash nor digital payments are inherently bad. And while we may be on our way to a cashless society in the future, this isn’t something that’s going to happen any time soon.
