I have almost completely eliminated cash from my life and I want to share my experience with you. First of all, it is amazing! The number of benefits associated with doing away with cash should not be underestimated — as I will get into shortly. Contrary to popular believe, it is very easy to eliminate cash from your everyday life. There are still some situations where you will still need cash, but with careful planning you can keep those situations to a bare minimum.
Let’s take a look at the benefits of not using cash (and I’m just scratching the surface):
1. Transaction Speed
Many people consider cash the fastest payment method, but I strongly disagree. Modern alternative payment methods (such as credit cards) are often just as fast as using cash and emerging technologies such as tap-to-pay technology are much faster. People often spend a lot of time counting change and reaching for coins when a single swipe or tap is all that is necessary. One of the most obvious examples of the speed difference is at gas stations. Esso, and other leading edge gas stations, have implemented quick pay technology that allows you to pay for gas with a tap of a key-fob or swipe of a card. This eliminates the need to enter the gas station to pay the clerk, leading to significant time savings (it takes 5 seconds to tap the device as opposed to several minutes to walk into the station and pay the clerk. Add even more time if there is a line-up).
2. Physical Convenience
Cash is cumbersome. It takes up an excessive amount of space. To carry the cash-equivalent of the spending limit on a single credit card, you would have to bring 10 extra wallets and a couple extra pairs of pants. Okay, so normal people don’t carry around thousands of dollars of cash, I get that. However, cash users should ask themselves how many times they have gone to the bank in the last month. I go to the bank less than once a month and it’s fantastically convenient. Also, coins. ‘Nuff said.
3. Cash Doesn’t Pay
Sounds weird, right? It should be obvious where I’m going with this. When you use cash, you get nothing. Okay, sometimes businesses will give you a break because they don’t want to pay taxes but legally-speaking there are no benefits. Credit cards, on the other hand, pay rewards and have many other benefits. For example, with my current credit card I get 1% cash-back on all purchases as well as roadside assistance and various travel perks. Sure there are downsides to using credit cards, but if you are of above average intelligence, have reasonable self-restraint and pay off your cards in time, you will be laughing all the way to the bank. Like me: muwahahaha!
4. Cash Leaves No Trail
Cash is very hard to track. For criminals this is fantastic but for the rest of us it is inconvenient. Unless you keep a cumbersome personal log of where you have spent your cash on a daily basis, it will be very difficult to budget and look back at your purchases. Modern technology allows you to automatically keep track of transactions with very little thought or effort on your part. Mint.com, the website I use to manage all my budgeting and transaction history, has the ability to import debit and credit transactions automatically from your bank. It may sounds sketchy, but just like everything else you have to embrace technology to benefit from it (cars were scary back in the day too. Imagine if everyone had insisted on still riding in carriages . . . Yup, I went there). Mint allows you to set budgets, view your account balances and even set financial goals for yourself, all in one convenient location. It even automatically tags transactions and categorizes them for you. Oh, and did I mention it is completely free? It can also record cash transactions, but it requires manual entry of that information (obviously) and defeats the purpose of the site.
5. Cash Can Be Lost — Never to Return
You drop a bill in a gutter. It’s gone forever. Someone steals your cash that you had lying around. It’s gone forever. Your cash gets irreparably damaged. Say it with me now: It’s gone forever. None of these circumstances are any worry with a credit card. Drop your card in a gutter? Get a new one – no loss! Someone steals your card and makes obscene purchases on it – call your bank and declare the fraud purchases to get a new one with no out-of-pocket expense! Your credit card gets damaged. Get a new one – no loss! You get the point. (I wonder how many incomplete sentences I just wrote . . .)
Needless to say, this is an issue I am very passionate about. I am now in my 4th successful year limiting my cash use and I will never go back. I cannot wait for further advancements in technology like Near Field Communication (NFC) to further reduce societies reliance on cash. I discussed this new technology (as well as my wicked auto-card wallet) in a previous post for those that would like to make their lives that much easier: Mobile Wallet, Google Wallet – Finally!
Insert inflammatory comment here: anyone still living in the stone-age using cash? Let us have a discussion in the comments below.