Does Spending Cash Really Save Money?

Chjaka

And don't forget those unscrupulous people who earn cash that they can't really be seen to be putting into bank accounts.

I think they call them FIFA officials.

moxter

phona wrote: »

There's a whole field of study called behavioural economics around this sort of idea.
(I've been reading psychology books of late so kinda got my geek on today)

BE is a fascinating field.

I am trying to cut down on cash as much as possible - not because I think it'll help me spend any less but because auditing what the money has been spent on is far easier with cards - I can go through a bank statement from a year ago and with rare exceptions I know what every card payment is for. With cash, it would need a daily diary which I frankly can't be bothered to do.

molerat

It is more down to the person and their mentality than the method of payment.

El_Torro

If I had a month's worth of cash burning a hole in my pocket I'd be tempted to blow it all in a week or two just to get rid of it. With my credit and debit cards I know I've always got the facility to pay for what I need so don't overspend.

I've never really understood people who spend lots of money on a credit card because they know they won't have to pay it off straight away. Where do they think the money's going to come from when they eventually do have to pay it off?

dano17439

How about flipping it? If you had a £10 note and bought something for £6, you can bet that the other £4 would be frittered away on a newspaper, a coffee etc etc. whereas if you used a card, you would only spend the £6

antispam246

As it's been stated numerous times, it's going to be different for every single person. For me personally, I never (very rarely) pay with cash. I have good control of my finances/spending. I use a CC for pretty much everything purely based on cashback/points. If I took out £250 cash, I'd probably get mugged within 5 minutes (;

Sayva

Where I can, unless it's under £10, I spend money on a credit card and leave the money in the bank earning interest until I pay the card off each month.

Mathematically, that makes sense. Psychologically speaking, maybe not for some people. Whether you spend more if you use cash or card comes down to the individual. I think maybe if I have cash in my pocket and I walk past a cafe and I'm feeling hungry then I'm more likely to pop in for a sandwich. If I don't have cash then I'm more likely to wait til I get home to eat which is much cheaper. Some people are definitely prone to making indulgent purchases with money they don't have. I think most people know if they fall into that category.

phona

antispam246 wrote: »

If I took out £250 cash, I'd probably get mugged within 5 minutes (;

This! I took out a couple hundred from an ATM outside the Post Office, then went inside to buy foreign currency and I was so jumpy! I certainly wouldn't be carrying around my whole budget for a month at a time!

It's interesting that the consensus here is we tend to spend on credit cards and get rewards - ie we spend rationally in our best interests - and we trust ourselves not to get into debt.
But then again, this is a forum for money savers so we're a self-selected sample. It's probably not a huge shock, then, that we have generally very sensible attitudes to money. If we ask people who are "bad with money" we might get different answers.

phona

Sayva wrote: »

Where I can, unless it's under £10, I spend money on a credit card and leave the money in the bank earning interest until I pay the card off each month.

Unless it's under £10...? So am I the only one who puts a £1 bottle of milk on the card? I want my 1p cashback.....

SuperHan

For me, the money I have is equal to by bank balance as that's what I want for budgeting. So any cash I have in purse I see as bonus money, or money that's already spent, so I find I spend it quite frivolously as opposed to money in my card!