Diminishing Role of Cash in Personal Money Management

Do you always spend money the same way? By this I mean do you always use the same form of money? Before you answer, think of all the forms of money available today for personal money management: cash, check, credit card, debit card, and electronic funds transfer.

While spending, do you always use the same method of transfer? These are the different actions you take to make the transaction, including: hand over cash, write a check, swipe a card, provide information over the phone, fill out an order form, fax an order, mail an order, or enter a transaction using a computer or mobile device.

How much cash you actually use as a percentage of your total outflows each month? Is this reflected in the way you are teaching your kids about cash and other forms of money?

Cash has been around the longest; it is that image of cash that still comes to mind when we think of money. Today, cash maintains its recognizable look although the design of our coins and currency does get a facelift now and then. But today cash plays a lesser role for most people.

At one time, cash ruled, with universal acceptance anywhere. Now, even as we adopt newer forms of money, we still carry cash just because. Even as we spend without using cash, we still give our kids money cash just because. Where did the cash go?

Times are changing and cash is losing its clout. In fact there are some transactions for which you cannot use cash at all. Would you have ever thought that possible?

If you need to shop online, book a flight or rent a car you can safely leave your cash at home. Get out the plastic because you can only use a credit or debit card for these transactions. And, in a personal oddity for me, at the 180-store mall near me I cannot use cash or check to purchase a gift card!

The reality is cash is taking on a supporting role. Cash is still part of the action, but not everywhere. Why is that?

The bottom line is: money is a number. Simple as that. Unless you are paid entirely in cash and pay every bill in cash, you are managing your money as a number in your financial account. People can no longer manage their personal money by monitoring what is in their purse, pocket or wallet.

Perhaps, we’re teaching the wrong lesson to our kids when we continue to give them only cash to manage. Read this blog to find out what might happen if you did not pay your kids with cash. What is a no-cash allowance?

 

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