How Using Cash Can Help You With Debt ManagementDec 07, 2016
Our world is rapidly changing. Thanks to technological advances, everything from spending money to debt management is becoming easier, yet it’s also bringing new complications. As society becomes increasingly cashless, it’s easy to forget that choosing to use cash over instant digital payment methods can still be a good idea.
More and more Canadians are choosing digital payment methods over cash. People like the ease and efficiency of tap-enabled credit cards and some, particularly millennials, are opting to use Apply Pay on their phones, or RFID bracelets.
Demographically, Midland is a fairly young community, with a median age of 47 and a large percentage of the population under the age of 19. Although baby boomers and older Canadians are getting in on the new digital payment methods, it’s the young who are rapidly adopting this technology.
Unfortunately, instant payment methods have a downside as they make it easy to forget you only have a limited amount of disposable income. If you’re not carefully tracking your spending and expenses, it’s easy to deplete your bank account before your next paycheque and have to turn to credit, which can quickly lead to needing debt help.
This is one instance when using cash for purchases can, in some cases, still be the best option. Some people find that only using cash is an excellent debt management strategy. They stop adding to their debt and even discover they are spending less, simply because it’s harder to actually part with your money when you have it in your hands. That leads to increased savings and a greater sense of financial security.
If you find you’re spending more than you’d like with digital payment methods, consider only using cash and debit for a set period of time. Limiting yourself to cash for six months or so will allow you to:
- See where your money is going
- Evaluate whether you’re spending on wants or needs and make changes accordingly
- Stop adding to your debt load
- Develop new financial habits that allow you to achieve your goals
If it seems impossible to only use cash, you can make the choice to stop using digital payment methods for a large part of your spending. For many people, groceries take up a significant portion of the budget. Taking cash to the grocery store forces you to stick to your budget and may even result in spending less on food so you have more money for other things.
Teaching kids to budget
Cash is still the best tool for teaching your children how to manage their money. Kids need to see and touch money in order to conceptualize how much they have so they can make decisions about their spending.
Whether your children use digital payment methods or not, consider giving them their allowance in cash rather than topping up their debit or credit card. This will give them a sensory experience and help them understand that there is a limit to how much they can spend.
Knowing there’s a limit, they’ll be more likely to ask themselves how they want to use the money before going to the store and less likely to make impulse purchases. Ultimately, you’ll reduce the chances of your kids needing debt advice in the future.
Debt management is an important skill for a balanced, happy life. Choosing to use cash instead of plastic or other devices can help you, or your children, master it.
Are you considering using cash for debt management? Share your plan at #LetsTalkDebt, #BDOdebtrelief