Digitization, which has become a global trend, is penetrating more and more areas of our everyday life. It forced us to leave classic solutions behind and try new ones. On many levels, this has its own pros and cons, but on the other hand, it generates risks that we are relatively rarely aware of. What is more, even if we are aware, we don’t pay much attention to them. We can relate this to cash payments, which year after year lose customer interest in favor of cashless payments. Fast, simple, and pleasant – that is what you think when you choose cashless payments but are they really good for us? Let’s think about why do we need cash and do we still need it?
We need to admit that the daily rush and our comfortable lifestyle in some way caused people to become unreflective. We do not have time for deep emotions and we choose what does not involve a lot of effort. How does it relate to our wallets? Despite all appearances, it really does matter.
After all, when we make a non-cash payment we do not have to lose our time on taking looking for a wallets, counting coins, and finally waiting for the change. Due to current technological development, all we have to do is to put the card into a terminal or even use our phone or smartwatch… and that’s it! While the use of cashless payment methods brings many undeniable benefits, in some ways – especially in terms of savings – it can be a real disadvantage.
In order to answer the questions of why we need cash and whether we need cash at all, let’s take a closer look at the psychological value of cash and the mechanisms that make our purchases more thoughtful and our savings more effective.
The psychology proved that – instead of paying in cash – we choose the cashless payments because it is “painless” for us. When we make a card transaction we rarely think about the real value of our purchases. We do not ask ourselves how many of the things in our basket we really need, because we only feel the expense indirectly. Finally, someone once said: “what the eyes do not see, the heart does not grieve over” and in that case, it is a very accurate observation.
Since non-cash payments “do not hurt us at all”, is it worth paying cash overall? Well, to be brutally honest, the “tangibility” of cash is a form of disciplinarian that allows us to better control our spending. Because of its quantifiability and the fact that it is not as “abstract” as a card, we feel the value of cash more keenly, and thus we spend it with more resistance.
When considering whether it is worth paying with cash or not, we can not ignore the fact that, unlike with cards, we can more easily set our own shopping limit. The amount of cash we are able to take with us on shopping trips is limited – exceeding this limit will mean that we simply will not be able to pay for all the products in our shopping cart. It is worth paying in cash, because this way we learn to plan our shopping carefully and precisely, and we are able to limit to the minimum those visits to the store that start with “just” and end with a full bag of shopping.
There is another issue related to the ability to control our own spending. Naturally, cash payments mean that we will never spend more than our current financial capabilities allow us to. Instead, you can spend less and use that money saved not for consumption but for investment!
There is a catch here though because very often people tend to reward themselves. We tell ourselves that
– “I did my workout, now I can afford a little something”,
– “I ate a portion of vegetables, now I can buy something sweet”,
– “I saved 300 PLN last month, now I can add a new [completely unnecessary] shirt to my closet”, etc.
There would be nothing wrong with this if it were not for the fact that very often over-rewarding ourselves makes us go back to square one and we are left with round 0 of the money we saved.
A perfect solution for people who are tempted to spend their “excess” money is to invest it monthly, quarterly or annually (depending on financial possibilities and personal preferences) in one or several classes of investment instruments. Ideally, these should be assets with possibly limited risk, which do not require much attention on a daily basis.
Such assets undoubtedly include investment gold, which is considered to be an excellent long-term investment of capital and in case of which regular investing protects against short-term price fluctuations. Another important advantage of gold, is its tangibility, because unlike in the case of shares or bonds you can actually see what you have spent your money on. But what matters most is that gold has played an important role in financial history, and one ounce of it had its value 1,000 years ago, 100 years ago, 10 years ago, and still has it today. It will continue to have its value in the next few, several, or several dozen years.
As if this were not enough, although the most common choice for gold investors is the 1 oz product, the market offers a much wider range of products. In practice, this means that you can invest in investment gold starting from as little as PLN 250. This is an amount that most of us are probably able to set aside every quarter or even month. The product which makes such convenient investing possible is our 1 gram Tavex Gold Bar – a real revolution in the gold market!
Back to the psychological value of cash, it is worth bearing in mind that it is inextricably linked to the freedom guaranteed by its possession, as well as to the sense of protection of our privacy.
Cash transactions ensure respect for the right to privacy, data protection and identity in financial matters. This is mainly due to the fact that in most cases these data are simply not collected. In contrast to cash payments, card payments run the risk of data about us and each transaction we make, which banks and payment operators, among others, naturally come into possession of, falling into the wrong hands. We often do not even realize how many ways we can be cheated.
There is no wonder that the findings of a series of surveys dedicated to the issue of preferred payment methods by Poles, conducted by our company, appear to be very alarming. At the end of 2020, more than 46% of respondents indicated that paying with a card makes them worry that they might fall victim to fraud. By the end of the first quarter of 2021, it was over 52%, so the numbers speak for themselves.
Speaking of security, at the other extreme to the above is cash, which is even identified with a form of security. Of course, our wallets full of money can always fall victim to theft, just like a debit or credit card. However, we are not afraid of lack of electricity or access to the Internet, because regardless of the circumstances, with the help of bills and coins we are always able to complete the transaction.
Adam Glapiński – President of the National Bank of Poland – spoke about the psychological value of cash and its role in a properly functioning economy with particular emphasis on its impact on shaping civic freedom, during the Cash Handling Congress:
“The elimination of cash as part of the pursuit of the cashless economy pushed by some banks, the media and multinationals is not conducive to expanding and strengthening individual freedom. On the contrary, it generates risks to the security and sovereignty of nation states and to the freedom of individual citizens.”
Cash payments, apart from their positive psychological impact on our savings, are also fundamental to our sense of freedom and independence, as they prevent permanent surveillance of our spending. Moreover, in case of any financial crisis, sudden stock market crash or even war, cash will remain a tangible means of protection in case of such events. These and other advantages mentioned in answer to the question “why do we need cash” lead us to the conclusion that – despite the global technological progress – we have needed, we still do and we will need cash.