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Cash Amnesia

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Re: Cash Amnesia

#31

Post by EGreg »

anamexis wrote: post #22
EGreg wrote: post #15

How quaint. Countries around the world are gradually phasing out cash, and forcing banks to report any transactions that add up to more than $600. They want the tax revenue and ultimate control — but they’ll claim it’s mostly to prevent “money laundering”. This is like analyzing the details of how people use vinyl records to play music. It won’t matter in 1-2 decades.

> This is like analyzing the details of how people use vinyl records to play music. It won’t matter in 1-2 decades. Sounds like what people were saying about vinyl records 2 decades ago.

And they were correct

Re: Cash Amnesia

#32

Post by noeontheend »

WJW wrote: post #7
malfist wrote: post #2

This goes against everything I'm familiar with around budgeting. One of the big tricks to getting your budget in check is to pay cash so you can see the money leaving your wallet. Swiping a credit card makes that all invisible

I can easily see both depending on how diligently people track their spending. I have a budgeting system setup that adds a task to my daily to-do list if my bank balance differs from what is in my hledger files (ie if I have transactions in my bank account that I have not yet put into hledger). The chances of me not being aware of on-card spending is extremely low. Cash money is not tracked nearly as accurately thoug…

Can I ask how you get the current balance from your bank (i.e., do you have a bank that provides a nice API, or is there another trick you're using)? I've spent a lot of time looking for a way to automatically download transactions from all my accounts but still have to either enter them by hand or manually log in and download a CSV to import.

Re: Cash Amnesia

#33

Post by tiltowait »

electroly wrote: post #4
malfist wrote: post #2

This goes against everything I'm familiar with around budgeting. One of the big tricks to getting your budget in check is to pay cash so you can see the money leaving your wallet. Swiping a credit card makes that all invisible

IMO, that's outdated advice from the days before online automatic bookkeeping, before credit card transactions were immediately visible online, before your bank could auto-classify your credit card purchases into spending categories, before configurable spending alerts, before budgeting apps with bank integration, etc. If you spend cash, you don't benefit from any of that and as soon as you forget about the transacti…

It really depends on the person. I found that budgeting apps with bank integrations were quick and convenience, but I wound up in the trap of only doing the most superficial analysis. ("Yep, sure did spend that much.") For myself, manually logging purchases is far more effective. It's a similar observation as I had in college, where I found that hand-writing my notes helped me learn better than typing them.

Re: Cash Amnesia

#34

Post by rkangel »

malfist wrote: post #2

This goes against everything I'm familiar with around budgeting. One of the big tricks to getting your budget in check is to pay cash so you can see the money leaving your wallet. Swiping a credit card makes that all invisible

I think this is ignoring that different approaches to budgeting are needed for different people.

For me, I have a Monzo account that I put my monthly "disposable" income in. Monzo is a (mostly) UK digital bank with a good app that gives instant feedback on transactions. This means that after every transaction, Monzo tells me "you have £X left this month". This allows me to regulate my spending (e.g. not buy X until next month) if I've spent a lot of my budget half way through the month. It also means that when I'm spending a lot I can go and look at my transaction history for the last few months and work out where it's going so I know what spending to moderate. With cash that's just a black hole.

Also, I just find cash to be a pain to deal with and have basically eliminated it from my life. You have to regularly visit machines to make sure you've got some, you have to carry it around (notes are fine, coins are annoying), you have to faff when paying to give and receive the correct change.

Re: Cash Amnesia

#35

Post by brightball »

electroly wrote: post #4
malfist wrote: post #2

This goes against everything I'm familiar with around budgeting. One of the big tricks to getting your budget in check is to pay cash so you can see the money leaving your wallet. Swiping a credit card makes that all invisible

IMO, that's outdated advice from the days before online automatic bookkeeping, before credit card transactions were immediately visible online, before your bank could auto-classify your credit card purchases into spending categories, before configurable spending alerts, before budgeting apps with bank integration, etc. If you spend cash, you don't benefit from any of that and as soon as you forget about the transacti…

It's not. The point of cash is to make you more psychologically aware of what you're spending so that you're less likely to buy something you don't need in the first place.

All of the online transaction tracking only helps with purchases that you've already made, so you can say "maybe I shouldn't have done that"...after the fact.

Cash based budgeting works beautifully, but it requires a change from what you're used to and there are certainly trade offs. If you're looking to save money though, cash budgeting is like magic.

Re: Cash Amnesia

#36

Post by wussboy »

r4indeer wrote: post #19
malfist wrote: post #2

This goes against everything I'm familiar with around budgeting. One of the big tricks to getting your budget in check is to pay cash so you can see the money leaving your wallet. Swiping a credit card makes that all invisible

For me, I need to have it the other way around. Regular withdrawals of similar amounts on my bank statement tell me nothing about how I spent my money a month from now. When paying with card, I leave a paper trail for myself to review later. I can also look at my banking app anytime I want to check how much is left. I actually do that before most purchases that go beyond a few bucks.

While I could make the same reply to almost every comment in this thread I have chosen yours at random.

I believe you are conflating the goal of "spending less" (which is hard) with a simpler goal "knowing more about how I spent my money" (which is easy). You claim to review your paper trail to gain insights, but again, even if you truly did this consistently (and knowing human nature, I doubt that you do) this in no way means you spend less.

Re: Cash Amnesia

#37

Post by kldavis4 »

TheRealPomax wrote: post #24
hunter2_ wrote: post #18

> “Certain products are more guilt-inducing because they feel more like impulsive purchases, like a foam hand for the sports game,” Huang says. “Some are more rational purchases, such as books or stationery products for class.” Sure enough, they found that customers were more likely to pay in cash for harder-to-justify items like stuffed plush mascots and Christmas ornaments. Or perhaps the group of people buying har…

When I first moved to North America, the idea that a credit card company was allowed to give people cash back, offer insurance, etc. for using their cards seemed like some bizarroworld "how is this legal" concept. Having lived here for decades, it still is. It's like an alcohol shop rewarding its most alcoholic customers by giving them free booze. And then if you sign up for a new card, or you cancel a card, some ran…

Furthermore, everyone, regardless of whether they are using a credit card, is paying for this in the form of higher prices (unless the vendor has separate cash prices...)

Re: Cash Amnesia

#38

Post by GravelRocks »

ComputerGuru wrote: post #8

> But more detailed record-keeping may undermine financial apps’ usefulness. “If people know that there’s going to be a record every time they use Apple Pay, based on our theory, people actually will use it less compared to if Apple Pay doesn’t automatically track and record and remind them in the statement.” This is so weird to me since I want to know how much I spend in any category. I’m annoyed only one of my link…

I assure you there are people that haven't decided how to pay for something before they reach the register. There's also a lot of people that will decide how to pay for something based on how much the purchase is at the register. Both of those examples are anecdotal, and come from working a register some decade and a half ago. Anecdotally, I bring cash with me when I go on vacation. I never really thought about it so much as guilt, but you could probably characterize it somewhat as that. It's at least done partially for budgetary reasons, but I'm sure subconsciously I really don't want to remember spending $80 at the Tiki bar.

As for the reproducibility it looks like, from the article, that they at least constructed several simular studies to test their theory:

1. "In one study, the authors analyzed more than 118,000 real-world purchases at the Stanford University Bookstore."

2. "Another study asked participants to imagine buying a 30-minute reiki session. Half read that the session was recommended by their doctor and would be at a hospital..."

3. "Another study explored shoppers’ preference for untraceable payment methods besides cash. Half the participants were informed they had a $20 bill and a debit card linked to their bank account; the other half were told they had a $20 bill and a prepaid debit card."

It's at least not a single, "3 grad students did this in an afternoon at the 7-11" study that tend to get picked up. I don't doubt that more research into the phenomenon might help get a better understanding of the underlying motivations for "cash/credit", but it does look like they are getting similar results from multiple experiments.

Re: Cash Amnesia

#39

Post by Larrikin »

hooverd wrote: post #5

Obviously you pay cash so it doesn't affect your social credit score. I always pay cash at the bar- it's an easy way to realize you're spending too much compared to just opening a tab. Plus you don't get stuck closing out if you wait too long.

Or just pay as you go with your credit card as there really is no upside to opening a tab or paying in cash if you have a credit card. If the bar is so busy that you think you're saving time by paying in cash, you're wasting that time else where by going to the ATM and making sure you have the right collection of bills to pay in exact change. If you're getting change even once then you're making the server spend even longer on the return trip to you by having to get the exact bills and change needed for you, instead of tapping your card. You also don't get the credit card rewards, which for someone with a good mix of cards is easily thousands of dollars at the end of the year added up over all the transactions. Bars and restaurants are established high reward categories.

$20 to $50 in my wallet usually lasts me a month or more at this point. There are a few well established bars and restaurants that force the burden on the customer by not accepting cards, but they nearly always have an on-site ATM. Many of them that are not outright amazing and lived on by their reputation from their longevity have started taking cards. Nobody would even dream of opening a new place that was cash only.

Re: Cash Amnesia

#40

Post by AlanSE »

kldavis4 wrote: post #37
TheRealPomax wrote: post #24

Earlier quoted context omitted.

When I first moved to North America, the idea that a credit card company was allowed to give people cash back, offer insurance, etc. for using their cards seemed like some bizarroworld "how is this legal" concept. Having lived here for decades, it still is. It's like an alcohol shop rewarding its most alcoholic customers by giving them free booze. And then if you sign up for a new card, or you cancel a card, some ran…

Furthermore, everyone, regardless of whether they are using a credit card, is paying for this in the form of higher prices (unless the vendor has separate cash prices...)

Higher cash prices are a violation of the card-holder agreement.
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