Former Slacker

The topic of watching one’s expenses has been harped on by every finance blogger in the world. I happen to agree with them, sort of. It’s vital to watch one’s expenses, but the methods chosen often seem less than optimal.

Much of what I’ve read about tracking expenses falls into one of two categories: Always pay cash or Write down every expense. Today I’ll just give my thoughts about cash, leaving the rest for later.

Does it hurt more to pay cash?
The idea behind always paying cash is that it hurts to hand someone else your money, and therefore, you’ll spend less. I agree that it hurts to hand someone money, but it doesn’t matter much whether it’s paper or plastic. If I’m going to have to stub my toe, I don’t really care whether I stub it on the door or the table. It hurts the same either way. If spending paper money hurts more, it’s only because we are more accustomed to credit and debit, so paying large sums of cash has become unfamiliar. If we paid cash all the time, handing cash to strangers would quickly become familiar.

The other premise of always paying cash is that if you don’t have the money, you won’t spend it. This is a particularly poor argument. Keeping track of my finances means I already know how much I have, whether it’s in the bank or in my wallet. I can choose not to spend the money if I don’t have it, regardless of the payment method in question.

Is it safe?
Refusing to pay with anything but cash seems to carry some intrinsic danger, as well. It implies that you will not be carrying any kind of card. If you were carrying a card, you’d be in the same situation as if you were carrying no cash. If you have the willpower to not use a card when you run out of cash, then you should also have the ability to summon the willpower to not overspend with a card at all. The cash argument is moot. And if you are not going to be carrying a card, you’re either going to have to start carrying more cash, or you’re going to be in a potentially serious problem if you run into any kind of unexpected situation.

Let’s say you go to the movies one night and come back to find that your car has died. What are you going to do if you don’t have any more cash on hand? Tow truck and cab drivers don’t generally accept kind wishes as payment, and your bank isn’t exactly likely to be open late at night. If you aren’t carrying a card, you can’t even go to an ATM.

It’s true that you can get along without ever carrying a card. People did it for most of human history. It is not, however, the most convenient way to live, and the slacker in me is always looking for the simplest way.

Can’t you just carry larger amounts of cash?
You could also just carry large amounts of cash, but I don’t care for that. Have you ever dropped a bill only to realize it when someone handed it back to you, or maybe after someone didn’t hand it back to you? Why increase the chances of that happening on a regular basis? Waving around a wallet full of green when you pay for your latte also makes you a better target than even the guy wearing two thousand dollars worth of chains. Stealing your wallet is easier than stealing someone’s necklace, and avoids the entire trip to the pawn shop.

Besides, if you’re carrying large amounts of cash, you’re no better off than just carrying a card, as far as overspending goes. I find that I am terrible about not spending the money in my wallet. Friends have told me they have the same problem. I’ll nickel and dime myself to death if I carry large amounts of cash. I’m going to buy that DVD, and eat lunch out, and I’m going to buy those gummy bears, too, because I’ve got the money right here. Any money in my wallet is by definition spending money, so I’m going to spend it.

I see no practical way to get away from carrying a card, whether credit or debit. Refusing to carry a card is going to put you in jeopardy if you run out of cash and find yourself in a situation where you need more money. Carrying large amounts of cash carries risks of its own. Carrying a card is by far the simplest way to avoid both of these issues. Pay cash if you really want, but carry a card. Always paying with the card might very well simplify your life, but I’ll talk about that later.