With the wide use of debit and credit cards, we seem to need it less and less. In spite of the fact that we kill ourselves to acquire more and more of the green stuff!
Younger generations use plastic and electronic payments more than anyone. Look at PayPal, Amazon and iTunes. It’s just a natural thing for them. While older generations prefer cash and checks.
My college age son charges a dollar or two on his debit card at work for a Coke. It drives me crazy! I usually give him a stupid look of disbelief that he spent $1.47 on a debit card.
So why is cash becoming obsolete?
Reason 1: Plastic is accepted everywhere. In fact, even vending machines! I struggled to think of a place that only cash is accepted. Aside from the old guy I buy tomatoes from, that I affectionately call, ‘mater man, the newspaper dispensing machine was all I could think of.
Reason 2: Risk of loss. I’ve never lost money before. I’d have to release my death grip on it first! If you do lose money, it’s rare you that you get it back. With a debit or credit card, you can have them replaced instantly, and in most cases with limited loss.
Reason 3: Risk of theft. Cash as well as debit and credit cards can all be stolen. If cash is stolen, it’s gone permanently. You don’t get it back. If a credit card is stolen, the bank changes your account number and reissues the card. Again a limited loss situation vs cash.
Reason 4: Planning is required. Cash requires a lot more planning. When you go to a bank or an ATM machine you have to have some idea how much cash you’ll actually need. You have to plan for the day or the week. That’s not the case with a piece of plastic.
Reason 5: The rise of mobile banking. Today you can do anything financial online. You can deposit a check with your phone, move money and pay bills. Requiring no cash at all. You can even pay other people your portion of the bill at dinner time with your iPhone!
I think cash will live on. Some people just prefer it for various reasons like budgeting or to control spending. I’m a carry some cash kinda guy. I like the feel of it and knowing it’s in my wallet or pocket.
I use cash for things like a coffee or fast food purchase. Most of my purchases are with a credit card, mainly because it is a planning thing for me. I have no idea how much I’ll spend that week at the grocery or pet store. So my plastic comes in handy.
As a financial planner, I would suggest that you carry around $50 cash in your purse or wallet. It’s enough to cover a small cash purchase, but not enough to bankrupt you if it’s lost or stolen. To me, there’s nothing worse than not having a few bucks of cash for a small purchase. Talk about feeling poor.
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