Pros and Cons of a Cash Only Lifestyle (2024)

FAQs

What are the pros and cons of cash? ›

Pros and Cons of Cash

Most people are willing to spend more on their plastic than in cash. Paying cash also avoids the interest charges on credit cards. If you can't pay your statement balance in full each cycle, you'll accrue interest charges. Some downsides to cash include the risk of loss, theft, and hygiene.

You Avoid Fees and Charges

While you may pay the same price for a product or service, whether you are paying cash or credit, with a cash only purchase, you won't have to pay the additional charges often associated with credit cards.

You'll have to plan ahead and have a well-stocked emergency fund if you're going cash only. Plus, in some situations, like when you're shopping online or paying bills, using cash can be downright impossible. “It's a hassle in the digital age,” said Harris.

Paying for daily expenses with cash can either make budgeting a snap or a swamp -- it all depends on how you manage your supply. You don't have to literally use envelopes, but if you separate cash for different purposes, then you'll be able to avoid over-spending on one category.

1. Theft deterrence: A cash establishment puts itself at more risk than one that accepts other forms of payment in which there's no cash to lose, miscount, or get stolen. 2. Slower service times: Swiping/inserting a card has been proven to be faster than customers fidgeting for cash and employees making change.

In addition to simply eliminating the costs and hassles of managing currency, going cashless may also reduce certain types of crime. The downsides of going cashless include less privacy, greater exposure to hacking, technological dependency, magnifying economic inequality, and more.

With cash, it's easier to have a sense of what you're spending. "If you're using cash in particular, real paper greenbacks, when your purse or wallet is empty you're done, so you can limit your spending in that way," Griffin says. For some people, being restricted to using only cash may be a better approach.

Cashless society: disadvantages

Rural communities could also be left vulnerable, because of poor broadband and mobile connectivity. People with low income or debt tend to find cash easier to manage too. Another potential disadvantage concerns security.

Cash is less secure than a credit card. Unlike credit cards, if you lose physical money or have it stolen, there's no way to recover your losses. Less Convenient. You can't always use cash as a payment method.

In addition to keeping funds in a bank account, you should also keep between $100 and $300 cash in your wallet and about $1,000 in a safe at home for unexpected expenses. Everything starts with your budget. If you don't budget correctly, you don't know how much you need to keep in your bank account.

Why is cash so inconvenient? ›

However, it comes with notable disadvantages. These include security risks, the lack of traceability, inconvenience for large transactions, and limitations for international transactions. As cash management technology continues to advance, the drawbacks associated with physical cash become less pronounced.

Lower returns: Since cash is largely a risk-free asset, investors don't get the “risk premium” that other investments, like mutual funds or GICs, may come with. Inflation risk: While cash has no capital risk, inflation can erode its purchasing power – meaning you wouldn't be able to buy as much with it in the future.

In cash jobs, you are not bound to a specific schedule. This means that you can work whenever it's convenient for you and take time off whenever necessary. The cash job employer will probably not ask about your personal life or how much leave time you need because you aren't bound by a written contract.