How Much Cash Should You Have in Your Wallet?

Cash is slowly but surely dying out. Over the past 30-40 years since the invention of the debit card, cash use has been slowly dropping. Barclays lay claim to the first debit card in the UK back in 1987, whereas in the US the title is more contentious. The first debit card there is believed to have been issued by The First National Bank of Seattle, though it may have actually been the Bank of Delaware in 1966 that started it all.

Either way, this was a huge innovation as it allowed people to use plastic to spend their own money. Since then, we’ve seen a number of innovations that have also reduced the need for cash, in particular contactless payments and mobile payments like Apple Pay.

So the question is, how much cash should you have in your wallet these days? Honestly for most people, the answer is none. In this article, we’re going to explain why it makes more sense for most people to avoid cash, but also one particular situation where using as much cash as possible makes a lot more sense!

Is Paying by Card Better Than Paying by Cash?

Card payments have become more popular than cash for good reason. They hold a number of significant benefits over paying with cash, and these benefits are only likely to increase over time. Let’s break down the key reasons why paying by card is better than paying with cash.

Security

Using a card to pay for all your day to day living costs is way safer than paying with cash. If you have wads of cash in your wallet, you could easily get robbed or forget your wallet somewhere. With a card, you don’t have this problem. It doesn’t eliminate the possibility altogether, after all someone could force you to give up your pin number or simply guess it if you have an easy one, but it is still much more secure.

It also means you can cancel your cards, and therefore access to your accounts, in an instant. If you misplace your card, you can protect yourself very easily by doing this, whereas with cash you don’t have that same option.

Tracking Expenditure

If you’re someone who loves a spreadsheet and loves to tally up your expenditure each month, using a card for everything makes this way easier. If you were to try to do this with cash, you’d need to keep receipts for every little expense you had, and tally them all up manually each month. Bloody nightmare.

With card payments, you can export the transactions from your banking app straight into a spreadsheet. You can even get some apps that will pull the information automatically and bunch your spend into categories for you. With that said, we think that budgeting sucks, and that you should do this instead.

Convenience

With cash, you need to make sure you always have enough on you for whatever might crop up throughout the day. Most days this might be fine, but on the odd occasion you need cash you hadn’t planned for, you’ll need to seek out an ATM or cash machine. This didn’t used to be much of an issue, but these days it’s getting harder and harder to find them. When you do need them, they’ll often charge you a (not) nice little fee for the privilege!

With a card, you have access to all of your money as and when you need it. Now this can be a bit of a double edged sword (we’ll get to that more in a minute), but from a pure convenience standpoint, you really can’t beat paying by card. 

When Should You Use Cash Instead of Card?

So by now you should be able to see why you really don’t need to carry cash in your wallet these days. It’s safe and more convenient to just use your cards or Apple Pay when you need to, rather than digging out notes and coins. But there is one time when we really do like the use of cash as a way to manage your money.

That time is when you are really struggling to make ends meet. The convenience of a card means it is really easy to just swipe away and not think much about how much you’re spending. It can be easy to check your bank balance and be shocked at how much all those small transactions add up.

If you are finding it difficult to track your spending, definitely go check this article out. It will help you set up a spending plan that still allows you to live a life that is actually fun, not miserable. Once you’ve done that though, using cash can be a great way to make sure you’re staying on track.

Rather than going shopping with a card that can access your whole life savings, you can go with a cash amount that matches the budget you’ve given yourself for the shop. If you’re going to the football, or a nightclub or a holiday or to the cinema or anywhere else, you can do the same thing. By keeping cash on you that matches how much you can afford to spend, it is plainly obvious how much you’ve got, and more importantly, when you’ve run out!

Summary

Generally speaking, these days it doesn’t make sense to carry cash. Card and mobile payments like Apple Pay are more convenient and more secure, but they can lead to overspending. If you’re watching your budget carefully, this can be one situation where using cash makes more sense because you can clearly see how much you have to spend.

If you’re using cash to manage your spending, you should only keep enough in your wallet to cover the expenditure for that day. Don’t walk around with your grocery money when you’re on a night out, as this will surely lead to disaster!