It can be difficult not to spend money when you just hand a card over. Sometimes money seems to fly out of your account without you even knowing it. This is why you can save more money by paying in cash.
Recurring bills, subscriptions, or even just purchasing little things here and there can add up quickly. Your bank account feels it even when you don’t physically see your money.
You don’t want any surprises next time you look at your bank account. Luckily, you can learn to save more money by paying in cash instead.
The Psychology of Spending Money
Imagine how much money you would save if you didn’t have a debit or credit card. If you could see the money in your hand, do you think you would spend less of it?
Research shows that it causes you more pain to pay in cash than if you pay with a card. This means a tangible dollar bill has more value to you than the same amount would from your bank account.
Seeing that money disappear from your grip tends to sting a little. Because of the distress it causes to see the money leave your hand, you become more careful with it.
Keeping tangible money in your wallet makes you think twice before you give it away. This subconscious perception of value is what helps you save more money by paying in cash.
The Reward of Cash
Not only does cash save you more by keeping you more accountable, but it also creates a higher reward. Because you feel more pain from giving away cash, you also treasure your purchases more when you pay with cash.
When you buy a product with bills, that realization of the pain of losing that money creates a higher reward. You’re far more likely to appreciate the item you just bought because you felt the sting of losing that money.
This transaction of pain to reward helps your brain understand your money’s weight. You may feel the pain of losing the money, but that dopamine rush of appreciation may just make it all worth it.
How to Save Money with Cash
Impulse buying is easy when you can’t see the money you’re giving away. If impulse buying is something you struggle with, paying with cash can save you a ton of money.
One of the best ways to do this is by budgeting with the envelope method. It’s a little old-school, but it definitely does the trick.
Labeling envelopes allows you to portion out your money as a form of budgeting. You can make one for bills, one for savings, and one for miscellaneous spending. Personalize it as you see fit!
Labeling where your money is going changes your behavior when it comes to spending. As you assign spending allowances for each envelope, you become more aware of the value of the money you have. With a limited cash allowance, you’re forced to think twice about what you spend that money on.
The envelope budgeting system has been used for over a century and hasn’t failed yet. In a seemingly cashless world, this may be the budgeting system you’ve been searching for to help your spending.
Try it for yourself!
There’s something about seeing the money you earned with your own eyes that will make you understand its power. The objective value of your money might not change, but the subjective value makes a world of difference!
Maybe it’s time for you to take a trip to your local ATM and pull out some cash. Holding your hard-earned money in your own hands might be the push you need to understand its weight. You’ll feel more organized, more responsible, and even more rewarded.