Daily Dupaco

Wednesday, June 18, 2014

The lost art of paying in cash

If you only have a $100 bill, would you break it on the purchase of a fountain soda, or skip the soda altogether?

Chances are, you’re more likely to scrutinize your spending if you have a limited amount of cash – rather than easy-to-swipe plastic – in your wallet to last the week, or month.Marcie Winkelman; paying with cash helps you spend less

“If everybody paid in cash, I think we would overspend a lot less,” says Marcie Winkelman, senior lending consultant at Dupaco's JFK branch in Dubuque. “With cash, you scrutinize each purchase a lot more, because once it’s gone it’s gone.”

There are plenty of sound reasons to use debit and credit cards. Plastic is convenient. The cards come with added safety and security features. You can track your spending through online and mobile banking. You might even earn points for each swipe of the card.

But there’s a catch. When you use plastic over cash, there’s a delay between the purchase and the realization of the budget impact. When a spur-of-the-moment purchase pops into your banking account, you then realize that it left you shorter on cash than you anticipated.

“We call that living on inflated income, when you’re spending more than what your income is,” Winkelman says.
 
Summer challenge
Paying in cash and plastic can both have their place in a healthy budget. The trick is knowing when to use each type of payment method.

Winkelman advises using credit or debit cards for regular monthly expenses, including bills, gas and groceries.

Cash can be your best budgeting friend, though, when it comes to out-of-the-ordinary purchases, such as entertainment expenses. So this summer, if you’re planning a trip to a fair, festival, concert or other destination, consider challenging yourself to stick to an all-cash diet for those events. Leave the plastic at home to take away the "charge it" temptation.

“If you have a specific budget and only take that set amount of cash to use, you know that once it’s gone it’s gone,” Winkelman says.

If you’re not sure how much you’re spending any given month, consider scheduling a Dupaco Money Makeover.

During those meetings, Winkelman often gives participants a budget worksheet to track their spending for 30 days. Members are instructed to write down every penny they spend – from fountain soda to utility bills – during the month. Much like sticking to an all-cash diet, the worksheet allows members to realistically watch their money dwindle as the month passes.

“I think it can be an eye opener. A buck here and a buck there adds up,” Winkelman says. “The worksheet makes a person honest about where their money is really going so they can hopefully make some changes and get themselves on a true budget.”

By Emily Kittle

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