Save Money by Paying with Cash

Control Your Overspending by Switching to Cash

If you liked this post, please click the button to share.

Affiliate Disclosure

If you want to know how to manage your overspending, try switching from plastic to all cash.  It will make you so much more aware of what you are spending and you’ll think about your purchases more carefully since cash is a limited commodity while plastic seems to be unlimited (although it really isn’t when that credit card bill shows up!). 

When I do debt coaching with people via my No BS Financial Freedom Framework, that’s one of the first suggestions I give most people.  Switch to cash for your casual day-to-day spending, and watch it taper off immediately!  It’s a very effective technique.  

The No BS Financial Freedom Framework
Spend Less by Paying Cash

How People Act Differently When Paying with Cash

Behavioral scientists have done probably hundreds of experiments over the years that clearly prove we have an emotional connection with actual cash that we don’t have with other forms of payment.  Here are a couple that I remember hearing about:

  • Researchers put cases of soda in college dorm fridges.  Alongside the cases of soda, they put paper plates of dollar bills.  Then they waited a week and came back to check.  The sodas – all gone.  Every last one of them.  The dollar bills – nearly all untouched.  The students viewed the pilfering of sodas as fairly benign, but they clearly recognized that taking money – even a dollar, was just a no-no, even if it was sitting there out in the open.
  • In another experiment, subjects were given an easy one-page questionnaire to fill out.  Half were paid the grand total of .12 cents in actual cash money, while the other half were given a voucher for .25 cents that they could redeem for a candy bar.  Even though the second half was paid the equivalent of twice as much money, the first group spent an average of 10% more time completing the survey.  Even though the payoff was such a ridiculously TINY amount of money, it still was recognized as being more valuable.

Why Businesses Don’t WANT You to Pay with Cash

You can bet that we aren’t the ONLY ones who have access to this research.  Every Corporation ever invented knows this research backwards and forwards.  They plan their sales strategies to get you to use ANY non-cash form of payment because they KNOW you will spend MORE than if you pay cash.  The stinkers!  I don’t know about you, but I get a big kick out of doing the exact opposite of what Corporate America wants me to do.  I’m just contrary that way.

They actually had commercials a few years ago that were blatantly anti-cash.  They would show dancing water, rotating flowers, and tons of happy people moving in unison to happy music.  Then everything would come to a screeching halt whenever someone stepped up with cash in hand.  Then someone would whip out a piece of plastic and boom, all the music would start up and all was right with the world.  That was about as subtle as a ton of bricks.

3 reasons WHY they don’t want you to pay with cash:

  • You are much more price-conscious when spending cash.  It’s so dang easy to just swipe that little plastic square and not think about the price.  There’s no natural stopping point with a card like there is with cash.  Plastic just feels unlimited.
  • Cash is a finite resource – when it’s gone, it’s gone.  That’s the beauty of it.  No retailer wants to lose a $60 sale because you only have $58 in your hot little hand.
  • Cash brings you back to the good old-fashioned state of “can’t afford it”.  It just feels more “real” when you are handing over a chunk of cash vs. an electronic transaction.  Try doing this with grocery shopping once in a while.  You become VERY aware of the prices when you are facing the embarrassment of having to put items back at the register.

I used this strategy on my son a while back.  He had a gym membership and like most people (read my post on gym memberships and why they’re a ripoff) he hadn’t been using it.  It was set up on automatic payments since that’s what the gym required.  So he really didn’t feel the pain when that payment came out every month, even though he was on a tight budget.

So, I told him to imagine going into that gym every month, reaching into his wallet to pull out a nice, crisp $20 bill and hand it over to the muscle-bound guy at the front desk.  Then just turn around and walk right back out the door.  That was the reality of it.  But he couldn’t see the PAIN until we put actual cash into the picture.  He called them up and quit the next day!

Wanna spend less money?  Switch to cash and skip the debit or credit card.  It will help you SO MUCH!

That’s why those cash envelopes for budgeting really work.  The ones where you put all your money for the month into different cash envelopes.  It’s a lot like Weight Watchers – you only get so many points and then you’re DONE.  No wiggle room – you spend money here, you have to take it from there.  Lawyers call that a bright white line – the clear difference between right and wrong.  And if you use it faithfully it works perfectly, just like Weight Watchers.

That’s why when I’m really broke, or when my spending is particularly out of control, I immediately switch to cash, especially for the non-essentials like snacks or frivolous items.  It’s always a big eye-opener for me and I usually get my finances back under control at that point.  I get that a lot of retailers aren’t thrilled with accepting cash, but it is still legal tender and they WILL accept it.

Pop Quiz:  How often do you go on a strict cash basis?  Probably not often enough…

Here’s a quick trick I learned recently.  You CAN buy something you want, IF you are willing to put an equal amount in your savings account.  What a great strategy!  Let’s say you want a $60 pair of shoes.  To buy them, you have to be willing to put $60 in savings as well.  Suddenly those $120 shoes aren’t such a good deal, and maybe you don’t want them as badly.  And if you do, at least you are boosting your savings account.  Clever!  

PS:  Tonight we learned the flip side of paying with cash.  You can LOSE it 🙁

To teach my High School-age son exactly this lesson, I gave him a $50 bill to pay for his back-to-school supplies.  I figured if I gave him fifty, he wouldn’t be able to sucker me into buying a hundred dollars or more worth of stuff.  Plus he was happy at the idea to totally pick out all his supplies.

But then he came up to me with that look on his face – you know the one.  The “something really bad” look.  Sure enough, it had fallen out of his pocket. Kids!  Fortunately, Target shoppers are apparently very unobservant, because he retraced his steps and found it on the floor by where he had been shopping – whew!  So that is the downside of cash, but if you put it in a proper wallet and not a pocket, it’s much less likely to get lost!

Here are some posts you may enjoy:

10 Secrets of Women Who Always Have Money

Quickly Organize your Meal Prep with Freezer Cooking

Financial Tips To Help Your Future College Student

Products and Services for Sale

Two of my top categories are organizing your home and managing your finances.  For me, these are top priorities for a happy and successful life.  So, over the years, I've put together a variety of resources to help you with these issues.

My Debt-Free Coaching

I've done debt-free coaching for hundreds of clients over the last eight years and I get a lot of joy out of helping people find simple and common-sense ways to dig themselves out of debt and learn to manage their money.  Check out my other website Start a New Chapter Consulting for more info and some great freebies.

Help with Your Blog or Business

If you are looking for any help regarding blogging, social media, or all things tech, you'll want to check out my other blog - Your Fairy Techmother.  I've been a full-time blogger and freelancer for a number of years, so I've gathered all my BEST tips into this helpful blog.

If you liked this post, please click the button to share.

Similar Posts


  1. This is a very good post. It’s definitely something we need to keep in mind. Thank you for sharing!

  2. I actually went overboard last month with the credit card (paying for EVERYTHING–groceries, phone, toiletries, you name it) and received a shocking bill in the mail. Lesson learned. I am going to attempt to carry around more of the green stuff in my wallet since I definitely spend less when I’m forking over my own hard-earned dollars 🙂 Thanks for this!

  3. So this is pretty interesting. I definitely feel that spending cash feels “real” to me.. you are so right! Those studies are so interesting!! On the flip side, when I pay with cash, I usually don’t track where i’ve spent the money as well as when I pay with a credit card. Hmmmmmm….

  4. I mostly use cash and it definitely makes you more conscious of what you’re spending. You can actually see your funds decreasing and you start thinking more in terms of needs instead of wants.

  5. I have a feeling I need to start doing this now! I know I feel more against spending a lot of money when I have cash in my hand- but I rarely carry cash anymore. It is so easy to just pay with a credit card!

  6. I paid with (mostly) cash for 6 months when we were first married. I even had the envelopes! :)It was a great experience and set good spending habits!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.