These days we don’t need to carry any cash. Just one small plastic card and the world is our oyster. We can buy almost anything we like simply by swiping our card over a small terminal on the counter of our retail outlets of choice.
Recently, a new coffee shop opened in the foyer of the building where Centrepoint’s Gold Coast office is located. The shop is ‘cashless’. That is, you can only buy your coffee by swiping your card. No doubt this is an emerging trend and we will see lots more shops moving to the cashless world.
More recently, we have seen the developments of apps that allow us to use our smart phone as a device for paying. I imagine it won’t be too long before the option of having a small chip inserted under the skin on our wrist!
As convenient as shopping without cash is, it does have its drawbacks.
How often have you taken a look at your bank account only to see that it runs into pages and pages of often small debits? The cup of coffee, a sandwich, a magazine or tickets to a movie – they’re all there. And when we look at the remaining balance, we ask ‘where did the money go?’
You see, when we live in a cashless world, it is hard to keep track of our spending. We just spend until there is nothing left.
This becomes a double–edged sword.
For many of us, if we are going to save anything, we save what is left over from the previous pay when our next pay comes in. We should be paying ourselves first – that is transferring our agreed savings before we start spending the remainder – but that is a topic for another day.
Of course, when we get to the end of our pay period, there is often nothing left to save anyway. We spend without knowing where the money goes. Sure, there are big ticket items like rent, petrol, insurance, electricity etc. but it is amazing just how much we spend on ‘junk’ without giving it a moment’s thought.
Back in the ‘old days’, we used to have simple ways of managing our everyday discretionary spending. We didn’t have the convenience of swiping a card, phone or other devices. And, we didn’t have ATMs!
So how did we manage our cash?
One popular strategy was to have ‘jars’. Each time we were paid, we were paid in cash which made things a bit easier – amounts were allocated to our different jars. So much for fares, lunches, entertainment, magazines and newspapers etc. We always knew how much was left, and when a jar was empty, we went without.
I am not advocating for one minute that we return to those days.
However, I think that one of the problems today is a lack of discipline when it comes to spending. It is just so easy to swipe a card.
A couple of months back I found that I was going through my money quite quickly and couldn’t reconcile where it was being spent.
So I tried an experiment.
After looking at my spending habits, I found that I needed (let’s say) $20 each day for discretionary spending. So, rather than just swiping my card each time I needed something, I got 8 small jars – one labelled for each day of the week, and one called ‘leftover’.
I then put $20 in each of the ‘day jars’. Every morning I took my daily allowance from its jar and put it in my wallet. If there was any money remaining from the previous day, it went into the ‘left-over’ jar.
I know this sounds extremely simplistic, but here’s what I found after a couple of weeks:
Having the physical cash reminded me of how much discretionary spending I have each day. It provides discipline however, is not very helpful in my cashless coffee shop (I found another one nearby that accepts cash, and makes better coffee anyway!)
I am no longer running out of money before the next pay comes in.
I am thinking twice before buying things I don’t really need.
Surprisingly, I have money left over at the end of each week, for saving or putting towards larger bills.
Effectively managing cash flow is a significant problem in today’s world. It is not confined to younger people, but is experienced by all generations.
Learning to live within our means will result in a more financially secure future, with the added bonus of less stress.
Challenge yourself – put a set amount aside for each day and see how well you manage.
We would love to hear your successes, obstacles and personal tips for managing cash flow.
Please share your own experiences in the ‘comments’ field.