Does paying cash matter?

I wrote a recent article about not becoming a slave to your possessions.   It made be begin to ponder the question about what kind of impact paying with cash only would make on your financial future if that was the only methodology you had to buy new things.   In the past six months, I have been testing this exercise by going through some stretches of time taking out cash only and making it the main form of buying day to day items.    I’ve always been a fan in the past of using credit cards to get frequent flier miles and floating your cash if you had the financial means to be able to pay off that bill each and every month.   However, I’ve begun to consider the real impact paying with cash has on how you think about the purchases you make.   Here are three reasons why paying cash might matter:

  • It feels real because it is real – Credit cards and debit cards almost put us into some sort of hypnotized state of mind when we purchase goods.    When the person behind the cash register tells us what the item is going to cost, and we know that no matter what they tell us we can get that item because our swipe card will take care of it.    When you finished your last run through the grocery store and they told you it was going to be $212.46, did you even think twice that you wouldn’t be able to afford it?   Next time you do something simple, try to pay in cash and notice the difference about how your brain processes the transaction.    I took my family out the other night to the movie theater and paid in cash.  It made me realize several things.    First, that the price of an adult ticket is currently $11.50.  Second, that children now officially end at 11 years old (really 11 years old).  I guess I don’t know who became king and decided that 12 should be the official age of adult.    Last, that a medium drink at the movie theater is almost 4$.   Heck, I could get a whole case of soda for $4.    By paying this way, it really made me consider how I would approach taking the family to the movies next time.


  •  It forces to you a finite budget – Next time you go to shop for clothes or sporting goods, take cash only to make your purchases.      Before you even get in the car to go to the department store, it will actually put some pressure on you to determine what your budget is when you go shopping.   Many people can create a spending plan or budget on an excel spreadsheet, but the practicality of that often goes out the window when you pay with credit cards.    If you figure that you only have $150 when you go to the clothing store, it will force you to consider where you can and cannot go shopping.    Once you are in the store, you will create a different strategy about what you really need and which parts of the store may give you the best bang for the buck.    Many years ago, families deployed an envelope like method to stretch their paychecks when times were tough.


  • You feel emotional gratification – Remember when you made that final payment after 48 months on your automobile.  It was that feeling when you sat on your couch and thought, “Yes!   I finally own that car!”   When you pay cash for something, what’s done is done.    There’s something that happens to your psyche when you pay for things in cash.   You have a sense of gratification about what the purchase means to you.  You bought it, you own it, and nobody can take it away from you.    That feeling makes cash a very powerful emotional tool in our financial toolbox.

It may be inevitable that we don’t even carry cash someday with all of these high tech gadgets that will act as an electronic wallet.  I think that a cashless society would be a huge mistake and disservice to all of us.    There’s still no feeling in the world like pulling out a $100 bill when you pay for something.   It gives you this sense of pride and attitude that says, “Yes, I am paying for this right now and I am paying for it in style.  Check please!”

If you have been struggling with how to get your financial house in order, perhaps you should try to go a weekend in your life with cash only.   Budget what you want to spend for the weekend, and then see if you can make it through the weekend without using any debit or credit card at all.   I think you’ll see in just a few days about it shifts your attitude toward the things you buy and how it makes you feel.   Good luck!

Written by:

Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®

Co-CEO and Founder oXYGen Financial, Inc

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About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves


My friends and family all think I’m a workaholic, but I say I’m just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

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  • Avatar
    William McLendon
    July 30, 2011

    This is so true, The other night when meeting my daughter’s future room mates and their parents, we was invited to meet for dinner. The Pink House in Savannah. (Great food) This was our first trip there as it is so pricey. When the time came for the checks, the others looked at me a bit different, I was the only one paying in cash. It makes it a little harder keeping up with receipts for my wife, but it also helps me keep the cost of daily living down. I usually think twice before spending the finite bit of cash I tote around. Where as using the plastic is easy, my wife writes the check to pay that bill off. And we will always live in a society where cash is king or barter swinging in a close second. When the grid goes down the dollar will shine. I hope you keep a few handy. Bill Mack

  • Avatar
    January 23, 2012

    In one article I see credit and loans being heralded. Now this contradicting article. Using loans and credit on liability items to get things now- undermines the impetus behind paying for things (which w see a lot of in this country). Credit driven societies never worked.

  • Avatar
    January 23, 2012

    Any what’s with some of these ads? This is oxymoronic to the theme of this BLOG.

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