Editorial Policy

Is Cash Going Extinct?

Kristin McGrath

March 30, 2012

How much cash is in your wallet right now? Could you buy a pack of gum without reaching for your debit card?
When I first left home, I remember my father telling me to always carry at least $40 in cash– a $20 bill, a $10 bill, a $5 bill and five singles.  That’s enough for a cab or your share of the restaurant bill. And, most important to my dad, cash enables you to leave exact change plus tip at the end of your meal at the diner — no waiting around for them to run your card.
I try to follow my dad’s advice. Right now, I have $20 in my wallet (a $10 bill, a $5 bill and five singles). And, since my brush with bank account theft, I’ve been trying to use cash more. But I’ve also been noticing that most people I know live a nearly cash-less lifestyle.
A co-worker told me how her family wanted to flip a coin to make a decision — and couldn’t find a coin (another co-worker joked that she should have flipped a credit card). A good number of my co-workers needed to “go get cash” so they could contribute a dollar to our office lottery pool. And, a couple nights ago, my friends and I presented our waitress with six debit cards and a sheet of scribbles showing how much to charge to each card.
Various studies have documented our evolving relationship with cash and plastic — and how our relationship with plastic may not always be a healthy one. A November 2011 Journal of Consumer Research study found that our increasing reliance on plastic is causing us to spend more. Another Journal of Consumer Research study from October 2010 found that shopping with plastic causes us to buy more junk food.
Yet, although plastic might make us spend more, consumers enjoy the convenience of cards — and the luxury of having all the money in their bank accounts available at all times. In the UK, a recent CardSave survey found that more than a third of Brits expect cash to be extinct by 2025 — and feel frustrated when businesses don’t accept cards. Sweden, meanwhile, is making deliberate efforts to become a cash-less society. And, with technology like card readers that plug into your phone and person-to-person mobile money transfers, those last few things we all use cash for (like paying the babysitter) will no longer require a trip to the ATM.
With paper and plastic money-spending habits in mind, here are some of the best personal finance blog posts of the week:
Money Crashers provides a step-by-step guide about what to do after winning the lottery.
Frugal Dad recommends unsubscribing from daily deals mailing lists as a way to save money.
The Centsible Life explains how a family can learn to live on one income.
Bucksome Boomer warns of the dangers in making big purchases on credit.
Fabulously Broke in the City tackles the most common justification for spending more than you have.
Out of Debt Again lists the most loathed bills and expenses.