When is the last time you peeled off a couple of 20’s to pay a bill? It is so much easier to slip a plastic charge card into a machine and sign your name. Doesn’t even feel like real money (till the bill comes at the end of the month)?
Recently, my wife and I were standing in line at the checkout. We chose this line because it appeared the customer was completing their transaction. To our surprise, she has having each of her grandchildren paying cash for two items each. I must have looked annoyed till she turned to me and said, “I am teaching these children money does not come on a plastic card.” If there had been a foxhole I would have been the first to jump in, embarrassed for my impatience.
What is the impact on our society, our children and grandchildren? How many people are unbanked? They have no relationship with a human (teller) at the bank. I remember my mother driving me to our local bank, walking in with her and making deposits from my paper route. What I received was an entry in a “passbook” savings account. I still recall the shock of seeing the RED entry after setting up with my mother for a bike I “had to have”.
Our banks no longer want that type of transaction. They instead push plastic with chips imbedded so a few are paid for every transaction. Oh, they “reward us” with points, be it travel or some other enticement. The bank’s logic is the safety of the workers at the cash register. No cash to steal. Also contributes to having fewer workers in the store at any time. How many of us got our first real paying job in retail, only to spend most of our paycheck on discounted merchandise? A blurb in the Wall Street Journal mentioned MVPs’ (Mastercard, Visa & PayPal Holdings) growth in computing is driving the cost of processing transactions near zero. They are just making it easier for everyone to use plastic.
There is less of a chance for error when we charge or use a debit card. In fact, Starbucks realized their register people were not getting the same level of tips as more dedicated coffee drinkers stopped using cash. Their solution, raise the price of coffee and share some of that increase with the workers. What a radical capitalist idea! Admit it, we are all addicted to our points!
Do you spend more or less, when you pay cash? Here is a challenge, look at your last credit card bill, divide by 4 (the monthly charges). Record that number. Withdraw cash in that amount and pay cash for a week, for everything you normally charge. Did you have enough cash? Were you more aware of your spending? Did you ask yourself, did I really “need that or just WANT it? Did you have feelings like I talked about earlier when mom and I settled up and a “red” entry hit my passbook?
In my opinion, paying cash makes you realize, with greater impact, what something cost. Going cashless will tend to have people spend more money that they may or may not have at that time. Today a package showed up at my house. I had clicked on a computer just a few days earlier. Provided some credit card information, having had no exchange with a human being. I started my business career many decades ago. When you pulled up for gas, I ran out, filled your tank up and washed your windshield. I was paid about the price of one gallon of gas for each hour worked. Most people paid cash and gave me the change (not the dollar bills). If I wanted something, my parents had taught me to think in terms of how many hours of work it took to buy that desired object. Do your children learn those money lessons today?
Ask yourself, if we had to pay cash for everything, would we spend the same amount? Good or bad…disappearance of cash?
Securities and investment advisory services offered through World Equity Group, Inc. member FINRA and SIPC. SMART Group Houston and Ron Schutz-Planning Business Transitions, LLC, are not owned or controlled by World Equity Group, Inc. World Equity Group, Inc., does not provide tax advice.