I have wavered on whether to use cash or plastic for the last 5 years. I grew up hearing and seeing cold hard cash as the physical strength it can have. However, I have grown to see the benefits of debit cards being a major way to save and control spending. So, which is better to use when you are trying to get a better footing financially?
I am currently looking into moving back to Phoenix, Arizona in the new year. With that, I have been focusing on my Dreamlining efforts and by calculating all my spending through Mint, I have been able to narrow my spending habits fairly well. The only problem is when I know I am going to be swiping that plastic debit card checkout, I neglect to focus on the budget I want to spend. With cash, I am able to see myself spending. With cash though, I can’t keep track of how much I have spent as easily and “a few dollars here and there” ends up being a lot of wasted cash. So, that leads me back to which is better to use financially…cash or plastic?
Let me lay out the Pro’s and Con’s for each to see if that will help come to a conclusion:
Using Cash:
- Pro’s -
- I see the actual amount coming out of my hand.
- I can only use whatever I have on me aka can’t go over budget.
- I am less likely to buy big ticket items.
- Con’s -
- I can’t keep easy records of where my money is going.
- I spend little amounts a lot of times.
- I might lose track of where the cash is at.
Using Plastic (Debit only…never Credit)
- Pro’s -
- I can keep great records of where every penny goes.
- I am able to see the progress (or regress) of spending.
- I hate swiping plastic multiple times a day so I rarely waste on little amounts.
- Con’s -
- I can easily buy big ticket items.
- I swipe without looking at how much I am spending.
- I disregard budget until after spending.
These are just a few of the Pro’s and Con’s to Cash and Plastic spending. I am still on the fence as to which is better. Currently, I have done a great job with plastic and watching my budget on Mint, but I have been easily influenced to spend more with plastic if not focused.
So, what do you think is better? Should I stick with plastic or switch back over to cold hard cash? Let me know by clicking here to comment.
Have a good one…
David Damron
LifeExcursion
You might also like:
I have mixed feelings about cash and cards. Usually I wear a very thin wallet so I can only bring two 5€ notes so the expendable amount is very limited but flexibility is not lost.
.-= paurullan´s last blog ..Anellament I =-.
Dave,
I Actually wrote a blog post about life lessons from my 20′s. I guess I never thoguht of a debit card as plastic since you actually have the cash to pay for what you are buying. I think it’s important to be able to track your finances, and thus I”m in favor of the debit card.
.-= Srinivas Rao´s last blog ..Coffee and Daydreams: A Simple Method for Daily Visualization =-.
I think that you should switch to cash. As far as tracking it goes, what I’ve read and recommended before is that you carry a small notecard (this can be a notebook, file on your cell phone, etc.) where you write down what you’ve spent every time that you spend money. That way, you can go home to Mint and split the cash withdrawal into the categories you’ve spent it on. You would have double awareness of spending then: once when you spend, at point of sale, and another when you enter your expenditures into Mint.
If you are disciplined to pay off your balance in full every month, you should be using credit cards for everything you can. A good air miles program will have you earning free trips abroad faster than you think. Especially, with all the sign up bonus programs in the US.
My wife and I get a free trip to North America every 2 years or so just from using the credit card for all of our expenses. It adds up quickly. Combine this with regular travel air miles and we have a free international trip every year.
Don’t waste those air miles.
.-= John Bardos – JetSetCitizen´s last blog ..Review of the fantastic book, Juggle: Rethink Work, Reclaim Your Life =-.
Interesting points Dave. Now I’m starting to wonder if debit really would be a better way to eliminate the slow bleeding of cash!
I’d love to see a post with more about how you use Mint to manage your money.
.-= Cody McKibben´s last blog ..Living By the Rules versus Living on Purpose =-.
Hey man… as long as you’re NOT using credit you’re better off than most.
I say use cash whenever possible and debit for the rest. My wife and I just instituted “Cash Envelopes” into our financial lives and were AMAZED at how much it curbs spending. The difference between swiping a card (even if you already have a budget) and taking cash out of an envelope with a “bottom” is not something that can be realized until tried.
Great topic, cheers.
.-= Matt Jabs´s last blog ..Personalized Gifts – Spend Less and Love More =-.
I think you have to figure out what your current goal is, is it to figure out how to budget your money better, or is it to actually save more money? I use debit, and track with mint, but that is mostly because I am still working to figure out how best to save more money. It sounds like you may already have that figured out, so perhaps it would be best to go all cash for a month or two and then compare your success with your budget to see how you did. Although I will agree, being able to track ever penny can be very useful and eye-opening. It certainly has been for me.
.-= Sean´s last blog ..A Recipe to a Life of Action =-.
Plastic is always my preference. Sure, you could end up spending more – but in general, I prefer being able to track where my money is going.
I think long-term, plastic is a better money management strategy. Using cash in the short term could keep you from spending extra money on candy or lattes, but it doesn’t help you look at trends over time as well.
Great post!
.-= Monica O’Brien´s last blog ..Free content sells. We get it. What’s next? =-.
In general, I don’t see much of a difference between cash and card. But I do tend to go the cash only route whenever I travel or go to an event like the fair. Because I’m pulling out my wallet more often than other times (when I’m at home, for instance, my wallet won’t come out for every meal), I find it’s easier to tell at a glance how much I’ve already spent with cash.
.-= Thursday Bram´s last blog ..Too Young To Go It Alone? Part Two =-.
I’m probably going to be an odd one out here, but I only use credit. However, I’ve never payed a finance charge. Like you said I like being able to track all my expenses. However, I also like getting interested free 30 day loans from my credit card company. Credit Cards are great. They’re only trouble when you spend money you don’t have.
.-= Jonathan Frei´s last blog ..‘Better’ is between where you are now and perfect =-.
I’m all about having ZERO cash on hand which I know is the opposite of most people and financial advisors. I and may I say, WE live in a digital world…I’m actually more conscious about my e-mail and information coming in on a digital medium than I am about anything physical…that’s a bit scary to admit to. Cash ends up being like free spending to me…it occurs like…you mean spending this won’t mess up my numbers on mint that I checked yesterday? sweet..it’s go time…I make sure to have limited cash in my pocket because I know I’ll spend it…whipping out my debit/credit card on the other hand…I think long and hard about…cause I already know it’s causing a chain reaction of numbers to be dealt with later.
Want to do a joint post on Mint? I’m all over it.
I agree with your point about…
“Cash ends up being like free spending to me…it occurs like…you mean spending this won’t mess up my numbers on mint that I checked yesterday? sweet..it’s go time”
I am down to do a joint post on Mint.com. Hit me up Robert. I heart Mint
David Damron
LE
The medium is the best: carry cash for day-to-day stuff that doesn’t cost a whole lot, and when you KNOW you may be buying big ticket items, just bring your plastic with you.
.-= bretthimself´s last blog ..Everything Points to One Thing: Action =-.
Hey Brett–
The problem for me is that when I bring cash I end up wasting $5 a day without even thinking about it. That ends up being $150 a month aka a lot of money. I understand your point and that will probably help people with self control. I wish I had some self control when it came to cash
David Damron
LE
I like both. I’d rather use plastic (frequent flier miles and other points), but cash is necessary at smaller stores/restaurants. Credit gets paid in full every month of course, otherwise the points are worthless.
I’m also against budgeting. I tried using Mint, but found it to be a waste of time. When you’re mindful of your spending budgeting is unnecessary. Even though it is fun to see the graphs Mint spits out.
.-= Karol Gajda´s last blog ..Refine Your Signal (or Fuck The Fluff) =-.
Thanks for sharing your budgeting thoughts Karol
David Damron
LE
I’m using more and more plastic but mainly because it allows me to pay online. I spend a lot of time on the road or at home and having a way to pay for my stuff without actually handing cash is a big advantage fore me.
.-= Dragos Roua´s last blog ..November Mariner Promo Code =-.
Great point Dragos. I agree with your thoughts on plastic being easier to track and control.
David Damron
LE
To a beginner like me, I use cash when going out. I just give myself a set amount in cash for the week and ration it out. If I end up having some $ at the end of the week, I save it and use it for weeks that I go over my limit.
.-= Ken Kurosawa´s last blog ..8 ways to Boost Your Motivation | Motivation Series Part 3 =-.
I tried this to Ken. It works if you have self control over the unnecessary. For me, I tend to blow a few bucks here and there which adds up.
David Damron
LE
I agree with John Bardos.
Use a credit card that has rewards. You have the credit card receipt and can go online and see a fairly current balance at any time. Categorize purchases. It is a good tool, but does require self control and conscious effort.
Damron, contemplating a move back to Phoenix?
Anyway when I am in the States I almost always use my debit card because as you mentioned, for me it eliminates small spending. If you can then control the large spending you are in luck of saving. However, you should have some cash on hand for things like going to a club or bar. Only take an allotted amount and don’t bust out the credit card ever.
.-= Migration Mark´s last blog ..Boating the Mekong River =-.
I tend to do a little bit of both myself. Every week I take out my “budgeted” spending money for that week. If I have any “high ticket” items I would use my debit card which is hooked up to my “Blow $ Account”. Then I have a “Pay the Bills Account”.
Whatever keeps you spending less is the way I would go.
Whenever I go shopping I re-think it, if I’m using cash. My Debit card was just too easy. (Too much of the whole “out of sight, out of mind.”
.-= Liz´s last blog ..5 Tips to Success in Business =-.
I use a combination of cash and plastic, only because I’ve got a great rewards programme attached to the credit card.
I have an allotted amount of money to spend each week – on groceries, general purchases, activities and entertainment etc. Budgeting a specific amount for groceries, and an amount for entertainment, and an amount for clothes wasn’t working for me. A figure each week to ‘spend’ keeps me in check.
At the beginning of the week I take a note of how much of that I’ve withdrawn from the bank in cash, and at the end of the week I count up how much is left and keep a tally.
Whenever I pay for something on credit, I write it down as soon as I get home. I can see from a quick glance when I do the figures at the end of each week whether I’ve over spent and need to leave the card in my wallet the next week.