Spending Money: You’re Doing It Wrong

Listen up, Millennials. According to your mom, your figure, and now researchers, you’re spending money all wrong. Instead of using cash, members our generation are much more likely to use a debit card to pay for our overpriced coffee, the one-gallon of gas that we need to make it to work, and our tickets to the Dollar Movie Theater.

TIME reported last week that the totally legit-sounding website “CreditCards.com” has found that Millennials are ditching the Benjamins in favor of some plastic. While more than three-fourths of adults over the age of 50 use cash to pay for items that are $5 or less, only about half of adults between 18 and 29 are doing the same (no, they aren’t stealing the stuff instead. They are just paying with either a credit or debit card).

Using a card instead of forking over a small chunk of cash may be a bad thing.

Research has suggested that we’re inclined to spend more when we swipe. A 2008 study published in the Journal of Experimental Psychology found that physically handing over bills triggers an emotional pain that actually helps to deter spending, while swiping doesn’t create the same aversion. As a result, the study found, cash discourages spending whereas plastic encourages it.

So, apparently this all means that we’re more likely to spend more money than we have since we aren’t actually watching real money disappear from our hands.

Other downsides to paying with a credit and/or debit card: apparently you become more focused on the benefits of a purchase instead of the price, and you’re more likely to overspend if there’s a “minimum purchase amount” requirement in order to use a credit or debit card.

However, “CreditCards.com” (I keep putting this in quotation marks because the name is just so ridiculous) fails to give us enough credit. Let’s be real: at least a debit card is better than paying with a straight up credit card. Money is immediately withdrawn from your account when you pay with a debit card, and if you don’t have enough money in your checking account, you’ll either be unable to make the transaction at all or be forced to pay a hefty overcharge fee.

Not gonna lie, I am far more inclined to use a credit card than any other method of payment. But I actually find myself more willing to spend money when I actually have cash as opposed to when I only have a credit card. It’s almost like I see it as loose change or something (like, I don’t think it’s that big of a deal to waste a few one dollar bills on some junk from a vending machine).

7 thoughts on “Spending Money: You’re Doing It Wrong

  1. Also, carrying around cash makes me anxious. Like maybe I’ll spend less everyday if I carry around $100 in cash but maybe the day that I withdraw that money from the bank is the day I get mugged for the first time ever.


  2. Very interesting! My bank actually told me I should use my card more than cash so there’s more ‘proof’ for them to see that I am able to manage my money, leading to good credit in the future etc.

    In Canada last year Visa had a whole campaign to get people to use their credit card on smaller purchases that you’d make anyway (campaign called Smallenfreuden). It was a good idea but got some bad press because of transaction fees for merchants possibly going up, so small business owners weren’t too impressed, the only downside to using a card more than cash I guess.

    I personally use my card for practically everything if I can. Cash is kind of pain to keep on you and I like being able to keep track of everything I’ve purchased without having to check receipts lying around, it’s all there in front of you on a statement, where every penny is being spent. It’s much more convenient!

    Ok ramble over! :-)


    • Wow! I’ve never heard of banks doing that. Their advice makes sense, I suppose. It’s a way to build credit history.

      I can totally see how the Visa campaign backfired. In the U.S. a couple years ago, American Express actually had an opposite campaign: they created nationwide commercials encouraging people to shop small/local businesses on Saturdays.

      I agree with you on the convenience of using a credit – and especially debit – card when you’re trying to keep track of your money. I’d rather let the card do the math than me do it on my own!


  3. There are advantages to using plastic. Insurance and things like purchase protection. Also for larger purchases we don’t want to be carrying sacks of gold do we? Money is a touch subject to come to grips with for everyone- whatever their background or age.


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