I am busy watching a Netflix documentary on Liliane Bettencourt, the heiress to the L’Oréal fortune and someone who is described as the richest woman in the world.
Early on in the first episode they state that Madame Bettencourt is worth thirty billion Euros. Quite obviously, a very considerable sum. They also mention, and simulate for the documentary, the use of cash and how absolutely everything in her household is paid for in cash. Envelope upon envelope of €500 bills, all pristine looking and no doubt fresh from a bank note company.
This had me thinking about the use of cash so I scrolled back in the OM blog and found various mentions of (cash) but in particular an article written by Byron in December 2014 titled ‘Why I Pay Cash’. Chief amongst his reasons he mentions identity protection and the feeling of a better appreciation of the amounts one is spending when cash leaves one’s hands! As opposed to paying by card.
I too, until three or four years ago, was a cash ‘fanatic’. Except for buying a car or a house I paid for just about everything in cash. My credit card lived at zero/zero and I termed myself the bank’s worst customer as they basically made nothing out of me. But then things slowly changed.
I started to notice that each time I drew cash from an ATM my bank was charging me what I thought was a disproportionate sum for the ‘service’. Be that locally or internationally. So I tried a different tack. By transferring money from a savings account into a credit card and using the credit card as a debit card to pay for things I found that the cost of the internet account-transfer was about an eighth of the ATM charge. On top of that, I began earning interest on the credit balance in my credit card!
Then there was, or is, the ever-growing issue of security. By that I mean physical/personal security. I still draw cash for some specific payments but now only do so at a few shopping centres where the machines are located in a branch of my bank. Never after banking hours though. Less chance of the card being cloned too as opposed to ‘holes in the wall’ in the street which are prime sites for that type of thing. I know this sounds a bit paranoid but I have been followed in a shopping centre after withdrawing money. I also had a colleague who some years ago was drawing money from a street ATM at three in the afternoon. Broad daylight. He was bumped on the head and never regained consciousness.
Since the 2014 blog article there have been considerable advances in the technology of banking and quite a few places no longer accept cash at all as a result of this. No doubt ‘they’ know when and where I have bought a cup of coffee or an ice cream but particularly in big cities it is becoming more and more the norm (not) to use cash.
I am curious to know how others have ‘evolved’ in the last ten years. Are members of the tribe going ‘cashless’ ? I realise that when one has hard currency ‘in the hand’ and one spends it, it is ‘physically gone’, so to speak. And immediately apparent. For some it is easy to rack up debts using a card. To others it isn’t a problem or a temptation at all. They manage their cards just as they would bank notes.
Keep in mind Old Money’s management of money is rooted in self discipline irrespective of whether it is in bank notes, cards, cheques, bartering with precious stones or whatever the method of the day is.
What are your latest thoughts, habits and practices?
– David
I carry cash and a debt card with only a couple of hundred in it. I use drive up only to get my cash. I also carry a stun gun. I am just more comfortable paying in cash and any shop or company that will not accept cash, well they won’t have my business.
While I was in the US, I was nearly cashless. Since moving to my host country though, I’ve been using mostly cash as “that’s how things are done here” despite the local government’s push toward digital payments.
I don’t mind using cash as it does seem to encourage frugality. Still though I think the march to 100% digital currency is ongoing, and it’s probably inevitable that cash will become a rare thing as we get older. 🤷♂️
I detest cash. Once the cash is in my pocket, as far as I’m concerned, it’s already been spent. I know it will be gone soon, and when it’s gone I won’t remember what I spent it on. But with a credit card, I am acutely aware that the bill will come due soon. And when I get the bill I am reminded again of that (possibly foolish) expense which I must now pay for. With credit cards I always think twice before buying something. But with cash I think, the money’s already gone so why not exchange it for whatever catches my eye? The money in the bank is real. The money in my pocket is as good as gone. I carry almost no cash.
I now use a credit cards for all transactions. I pay the cards off every month and don’t spend anymore than when I paid using cash. I realized that by using my cards, I receive reward points on one card, which I can redeem to obtain gift cards based on the number of points accumulated and the other card gives cash back. I always make sure to obtain a receipt and reconcile the receipts against the monthly statement received from the credit card company to detect any unauthorized purchases.