Cash Only Change Life

My pockets are full of this stuff…

Today, I wrap up my two-week experiment using cash. It was an utter failure, and I hated using cash. What I’ve gained in coinage, I’ve lost in faith in the all-mighty dollar. While I tried to look for positives from using cash, I found my little experiment to be quite telling. Credit and debit cards are now a fundamental part of my purchase process. I’d take a slim credit card with benefits over the greenback.

Coincidentally, as my experiment ended, a recent story about the costs of cash was published on CNBC. The article pointed to recent research that suggests that cash costs as much as $200 billion per year to the American economy (Chakravorti & Mazzotta, 2013). This study sounds an alarm: businesses, consumers, and the federal government are suffering the consequences of cash usage. The old vestige is detrimental to everyone involved.

Cost of cash to American Households

Cost of Cash to Households. Graphic from Research PDF.

Time and fees add up to serious cash costs. From foreign ATM/Transaction fees, account fees, time spent (trying to access cash via ATMs, banks, etc.), and thefts of cash, billions of dollars are lost. For consumers, the primary loss is incurred in time spent getting cash. Turns out that searching for and accessing money via an ATM actually costs America more in time than the fee associated. For businesses, the largest detriment is in retail theft, as many companies can’t afford Brinks trucks and armored protection of funds. Lastly, the governmental cost is monumental. Due to printing costs, management, and uncollected taxes (due to cash-based avoidance of taxation), the government loses about $100 billion from cash.

Fundamentally, cash should be dead, but there are a number of holdouts and reasons to worry about the decline. Cash is one of the only methods for private transactions (non-traced), can help manage out-of-control spending, and can even be advantageous when buying things like gas. Likewise, wealth gaps are leading to more cash users in lower incomes – inaccessible to newer banking technologies for a variety of reasons.

Generational differences may change all of this. Younger generations (those under 25) carry far less cash, when compared to older adult populations. (65 and older). As I struggled to use cash, it dawned on me that I haven’t used cash every day since middle school/high school. It doesn’t come naturally to me, and I’m looking forward to using plastic again.