In an era of digital transactions and contactless payments, it seems that Gen Z has found an unexpected money-saving hack that’s catching on like wildfire. According to a Credit Karma report from May 2023, a whopping 69% of Gen Z individuals are now opting to use cash more frequently than they did in the previous year. But what’s the secret behind this old-school approach to spending?
It turns out that Gen Z’s savvy money habits are driven by a simple yet effective trick that can benefit anyone looking to manage their finances better. Among those who choose to use cash for their purchases, 59% claim they do so as a way to budget effectively, while an impressive 64% assert that they spend less money when using cash. Take a look at the reasons behind Gen Z’s love for cash and discover practical ways you can adopt this money hack in your own life.
Unlike digital payments or credit cards, cash offers tangible limits that keep spending in check. When you see physical money leaving your wallet, it serves as a constant reminder of your budget, reducing the likelihood of impulse purchases
With cash, you can allocate specific amounts for different expenses, creating a clear budget that helps you stay on track.
Cash transactions eliminate the risk of accumulating credit card debt or falling prey to interest charges. Since you can only spend what you have on hand, there’s no room for the financial burdens that often accompany credit cards. This straightforward approach encourages financial responsibility and keeps you in control of your expenses.
Bonus: Cash transactions reduce your risk of falling victim to cyber fraud or identity theft associated with digital payments.
Deals and Discounts
Using cash also provides an opportunity to negotiate better deals and discounts. Some vendors may offer lower prices or special incentives for cash payments, giving you bargaining power and saving you money on purchases.
“My cleaning service offers a 5% discount if I pay in cash,” shared Melanie Lewis. “Even if that’s only five or ten bucks, these kinds of things add up.” Additionally, cash transactions often bypass transaction fees associated with digital payments, adding to your savings over time.
Another way cash can help you save is through the collection of loose change. Those seemingly insignificant coins can add up quickly when you save them diligently. Turning your loose change into savings can become a fun and rewarding habit, making cash transactions all the more appealing.
Overall, using cash fosters a heightened sense of financial awareness. As you physically handle money and track cash expenses more closely, you gain a clearer understanding of your spending habits and make more informed financial decisions. With cash in hand, you’re more likely to prioritize savings and adopt a more mindful approach to spending, ultimately leading to a healthier financial outlook and a more secure future.
How Gen Z Is Doing It
There are several ways to handle cash spending — here are a few.
The Envelope Approach
According to Rayner Teo of TradingwithRayner, Gen Z has cleverly embraced the envelope approach, aka “cash stuffing,” as a means to budget for various expenses like groceries, entertainment and dining out. With this method, they allocate specific amounts for each category and stop spending once the corresponding envelope is empty.
Teo told GOBankingRates the envelope method can also be used for emergency funds, vacations or any major purchase. This concrete approach to budgeting enables you to stay on track and avoid the pitfalls of overspending, allowing for a more disciplined and mindful financial journey.
Traveling With Cash
Marcus Clarke from Actual Travel Guide shared that cash continues to reign supreme in numerous destinations across the globe. In many remote locations or at small businesses, card payment facilities may be scarce, making cash the preferred — and often only — means of payment.
Gen Z travelers, known for their adventurous spirit, are prepared for such scenarios. Their resourceful nature ensures they always have cash on hand to navigate these situations seamlessly and enjoy their travels to the fullest.
Loose Change — No, Really!
Another way cash can help you save is through the collection of loose change. Those seemingly insignificant coins can add up quickly when you save them diligently.
“I take my piggy bank to a CoinStar machine every few months and walk out with $20-$40,” shared Lewis. Turning your loose change into savings can become a fun and rewarding habit, making cash transactions all the more appealing.
Ask for Discounts
Once you get a clear picture of your monthly cash spending, it’s time to identify areas where you can save. By reducing fixed expenses, you’ll free up more money in your bank account each month.
You can start by reaching out to companies you pay regular bills to and asking for a discount. If they don’t offer one, consider switching to a different service provider or canceling the service altogether. Even if you continue with your current plan at its current price, you’re a more informed consumer than you were before.
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