All You Need is Cash? Think Again

Here’s what happens when you choose paper in a world of plastics.

I never carry cash. Never. I’m a firm believer that a cashless existence is perfect. If I’m splitting dinner with friends, I drop my debit card in the center of the table like I’m dropping a mic. Even for a $2 pack of gum at CVS, I swipe without a second thought. Handing my card over to the bartender at the end of the night is second-nature.

It’s not really hard to live a paper currency-free life. Especially in NYC, it’s often not necessary to carry cash anymore. Venmo, PayPal and other money-sharing apps make it easy to reimburse a friend or tip your piano player or favorite mixologist. And Apple Pay has come in handy too — especially when I realize I’ve left my wallet at home and had to buy coffee or groceries.  Sweden actually has a goal of becoming a cashless society by 2023. In my humble opinion, the future is cash-free.

But before dollar bills go the way of the dinosaur, I decided to live the entire month of June without using my credit or debit cards once. As it was Pride month (and WorldPride, to boot) I knew that I would be hanging out with many of my friends, attending events and generally celebrating all things LGBTQ. But, I wondered,  would putting away my plastic put a crimp in my Pride plans?

The Experiment: An All-Cash Diet

When starting my cash-only test, I turned off Venmo, hid away my Apple Pay and stashed my credit cards in my underwear drawer. Not only was my rule that I would pay for everything with cash, but I was also determined not to take out money from anywhere other than my own bank’s ATMs. I set myself a budget of $125 a week. That allowance was meant to covered everything aside from my fixed costs. (Among those were included rent, streaming services, internet, phone and insurance.) I’d pay for groceries, bars and restaurants, laundry, and transportation all in cash.

A Few More Specific Guidelines:

1. I’d withdraw $125 every Sunday. That’s all I would have for the week.
2. If I didn’t spend my full weekly allotment, I would allow extra money to roll over to the next week.
3. I’d carry one credit card for emergencies. And by emergencies, I meant an actual crises — not merely the desire for one more cocktail.

So How Did It Go?

Admittedly I had weeks where $125 wasn’t enough. Dinners out, toasts to Pride: it was probably the wrong month to try my experiment. But the biggest takeaway was how much more mindful I became of what I was spending. Handing over $80 in cash for dinner and drinks is more meaningful than using Venmo to pay a friend. You really think about what those four $20-dollar bills mean — and how hard you worked to get them.

I walked more. The convenience of taking a Lyft had become second-nature to me, but living on a cash budget forced me to walk or take public transportation whenever possible. And when I was home, I ordered from Seamless less and cooked for myself more.

As an added bonus, I lost weight. The combined walking and cooking for myself managed to shave off around 10 pounds. I’m sure it would have been more if I hadn’t devoted much of my cash budget to Fireball shots and vodka sodas. But it was Pride, so I forgave myself.

Other Lessons Learned

Using a cash-only budget during the week is a great way to save for a big purchase. In your case, that could be a vacation to Mykonos, a new home, or a summer rental on Fire Island. If you are more mindful of what you are spending your cash on, you might be compelled to save more.

One budgeting method to try is the 50/20/30 budget rule that Senator Elizabeth Warren popularized in her book All Your Worth: The Ultimate Lifetime Money Plan. The basic rule is to divide after-tax income, spending 50% on needs and 30% on wants while allocating 20% to savings:

• Needs: Needs are those bills that you absolutely must pay and are necessary for survival. These include rent or mortgage payments, car payments, groceries, insurance, health care, minimum debt payments and utilities. Fair warning: the “needs” category does not include certain items that may feel like needs, such as premium cable, Venti lattes and dining out.
• Wants: Wants are all the things you spend money on that are not absolutely essential. Here’s where staying cash-only can make you think twice about splurging. Wants include visits to bars and restaurants, tickets to shows, new outfit and shoes. Basically, it’s all those little extras you buy that make life more enjoyable and entertaining. Using cash here will definitely make you think before you empty out your wallet at the register.
• Savings: Finally, allocate 20% of your income to savings and investments. This includes adding money to an emergency fund in a bank savings account, making IRA contributions to a mutual fund account, and investing in the stock market.

By the end of June, I learned to appreciate how much money I was spending almost every time I went shopping or out for a night on the town with friends. Being mindful of my spending my just be my mantra for the rest of 2019. And just maybe that means: I’ll see you in Mykonos.       

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