Why You Probably Pay Cash When Buying Stuff You Don’t Need

We pay with credit to remember and cash to forget

Ben Le Fort

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Photo by ian dooley on Unsplash

We are rapidly moving to a cashless society.

Research from The Federal Reserve Bank of San Fransico shows that the share of payments settled in cash has decreased from 31% in 2016 to 20% in 2021:

Chart created by The Federal Reserve Bank of San Fransico

When you look at the chart, it’s clear that people are rapidly switching from paying with cash to paying with their debit/credit card.

Cash is less convenient than paying with a card, and, importantly, from a personal finance perspective, paying with cash makes tracking your spending more difficult than paying with a card that allows you to track every penny spent.

Interestingly, the fact that transactions are hard to track provides the only viable use cases for cash; it spares you the pain of remembering all the money you wasted on crap that you can’t justify buying.

We pay with a card to remember and cash to forget

In a 2023 study, researchers analyzed 118,042 real-world purchases and ran six separate experiments to…

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