The quote that "cash is king" or the that different studies over the years have come to the conclusion that we spend less when we use cash. Certainly we do have limitation when we use cash, we can't write an I.O.U to the cashier that says the next time we are in the store we will pay the remaining 5.61 on our grocery bill. But that doesn't mean I don't still waste money.

Cash is dangerous for me to carry around, the temptation to buy stuff that I don't need is very great. When I jingle the change in my pocket, it is a siren call to the vending machines at work and they call out to my weakest desires.

I generally keep cash in my wallet in case I forget to pack a lunch, but recently that money went to a soda pop, donation for a women's shelter (also to wear jeans to work for the week) and to pay more than my share of the pizza for the team. You see, if I didn't have cash on me I would drink less soda pop, order less pizza and be stingier with my money for donations.

There are people that go and get cash for their paychecks and make the wad of money last for rent, food and still are able to save. But if I did that, I would be broke a week before I got paid again. Someone asks me for a dollar, I give it. Someone asks for a donation, I give it. I have a craving for a spicy chicken sandwich from the fast food joint, I get it.

The idea of an envelope system to break up the money never worked for me, I would "loan" money to other envelopes without consequence and not always pay it back. And writing down everything I spent the cash on had no consequences. It was similar to a "see food diet", I see food I eat it.  I see stuff to buy, I pay cash and get it. No worries.

Instead, I have learned to carry around my debit card because it is more of a hassle to swipe the card and save the receipt for when I get home to write it in the checkbook as to whet I have spent. It would seem that in my mind there is less accountability for cash than there is with a debit card or check. Cash doesn't require books to be balanced every time something is purchased. Instead the habit of using a card and writing it down is more ingrained in me than the use of cash and writing it down.

What have you found when you use cash as opposed to a debit card or checkbook?


  1. Hollis Colquhoun // Friday, November 27, 2009 9:52:00 AM  
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  2. Carrie // Friday, November 27, 2009 10:18:00 AM  

    the saying doesn't refer to paper cash it refers to cash flow. basically it means that you have to have enough money coming in each month to cover your monthly expenses without having to sell your investments to do so.

  3. Hollis Colquhoun // Friday, November 27, 2009 10:28:00 AM  

    I believe that the saying "cash is king" means pretty much what it says. If you have cash, money or something that can instantly be turned into money, you are in the best, least-risky, most-able-to-negotiate position. Cash flow does not refer to cash alone but to how money coming in is measured relative to expenses being paid out.

  4. Wojciech Kulicki // Friday, November 27, 2009 10:38:00 AM  

    I have the same problem--carrying around cash is just an invitation to spend it. When I don't have cash on me, the answer is simply "I don't have cash on me," or it's time to pull out the debit or visit an ATM.

    Either option, as you point out, is annoying, so we end up spending less.

    Great post.

  5. Dawn // Friday, November 27, 2009 11:58:00 AM  

    That is a good point - get what you need for the day and budget accordingly or go without.

    I have never heard it referred to cash flow, seriously. All the references I have heard were when talking about credit/debit cards or cash to pay for something.
    It does put a slightly different spin on things - one I wouldn't disagree with at all - cash flow IS king.

    Maybe you have just found the heart of what works for people - Is this way or that way more annoying to pay with?

  6. Jeremy // Saturday, November 28, 2009 3:30:00 AM  

    Gosh I couldn't agree more.

    I stopped carrying cash about 4 years ago. I now only purchase exactly the dollar amount I meant to spend (your coins in pocket comment is very apt). I have better purchase protection from retail stores (lost your receipt? no problem), reporting stolen cards is easier then reporting stolen cash (i.e. not at all), etc.

    I do, however, prefer to do the credit card over debit card route, mostly due to banking laws involving fraud protection. I'm diligent about paying it off every month, so I incur no finance charges and get 2% cash back "for free" in a manner of speaking, and it really adds up.

  7. Jill // Monday, November 30, 2009 2:15:00 PM  

    My method is varied...I don't like to pay ATM fees and my credit union has no free ATMs. I get enough cahs for my food and other cash based expenses at the beginning of the month. I leave it in the house and only take what I need for the day. Gas is now on the credit card (because I'm too lazy to go inside and prepay!). I don't carry much because it's too easy to spend. I almost never pay with a debit card. Just never got in the habit. I also write down each expense in a budget book and track expenses precisely for a month at a time 2 or 3 times a year just to make sure I'm doing OK.

    I used to abuse the credit cards but have managed to break that habit.

  8. Lulu // Tuesday, December 01, 2009 10:21:00 AM  

    I also do not carry around paper (or coin) money because I prefer using my credit card and then paying off the card.

    I need quarters for laundry so every now and then I need to touch cash for that reason...but otherwise I am plastic all the way.

    I think I would also be prone to getting something from the vending machine if I had cash so it helps me to save.

    As for debit cards..I don't even have those. I worked as a bank teller for one year in my teens and touched so much NASTY money that I try to avoid it as much as possible.

  9. Rob Lantrist // Wednesday, June 02, 2010 5:54:00 AM  

    I have the same problem - when I don't have cash on me, i have the right answer: I don't have cash now.
    Thank you for posting.

  10. forehead acne // Thursday, August 05, 2010 5:49:00 AM  

    the saying doesn't refer to paper cash it refers to cash flow. basically it means that you have to have enough money coming in each month to cover your monthly expenses without having to sell your investments to do so.