Is cash still king? In today’s digital age, where contactless payments and mobile wallets have become the norm, it may seem like carrying cash is becoming a thing of the past. However many Americans are still using bills and coins to pay for their purchases. One in five say they prefer the minimal risk and convenience of cash, according to new research from Empower.
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As a financial advisor, I always recommend at least carrying one card, but there are still several situations where cash proves to be invaluable. Let’s delve into these unexpected reasons and understand why it’s wise to carry cash with you.
In Case of Emergencies
Imagine finding yourself in the middle of a power outage or a natural disaster, where electronic payment systems are rendered useless. In these situations, having cash can be a lifesaver. Cash allows you to purchase essential items like food, water, and medical supplies when electronic means of payment are unavailable.
Cash can also serve as a backup in instances of identity theft or fraud, offering an alternative means of payment while resolving any issues that may arise.
Cash Supports Local Businesses
While many businesses now accept digital payments, there are still some smaller establishments that prefer cash transactions. Most merchants need to pay a fee to process credit card transactions, which can affect their bottom line.
Using cash helps these businesses avoid the hefty transaction fees imposed by credit card companies, allowing them to keep more of their hard-earned revenue. By carrying cash, you can support local businesses that rely on cash payments, especially street vendors, family-owned shops, and small-scale service providers. These businesses often have lower transaction fees and are more likely to pass on cost savings to their customers, making cash transactions beneficial for both parties involved.
Improved Budgeting and Spending Control
Using cash can help you better manage your finances and control impulsive spending. Physical money provides a tangible representation of our finances, making it easier to grasp the concept of money and its value.
With digital payments, it’s easy to lose track of how much money you’ve spent, as transactions are often swift and effortless. Using cash imposes a natural limit on our spending, as we can only spend what we physically possess. Unlike with digital transactions, we cannot go over budget or accumulate debt when using cash.
Paying with cash encourages us to make more conscious purchasing decisions. The act of physically handing over money makes you pause and evaluate if the item is truly worth the expense. In this way, cash can help you maintain better control over your spending and ultimately support effective budget management.