Card technology makes you spend more 25



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How much cash do you have in your wallet right now?

The Reserve Bank of Australia reckons that you have about $55 and you probably don’t top it up on  a weekly basis. As a share of all our payments, our use of cash has fallen from 69 per cent in 2007 to just 47 in 2013.

I don’t know whether to be excited about technology or fearful.

That sounds a bit dramatic but it’s kind of one way or the other. I don’t know if there is an in between. And I don’t want to sound like an old fuddy duddy either, as this is progress… right?

What I do know for sure though, is I want to have clarity about my money and I want to feel confident about my financial position.

With all of the things on our plate every day – taking care of grandkids, working, entertaining, family time, self time, managing the budget (my head hurts because there is so much more!) – I believe this has become a convenience that we are paying the price for.

I’m sure as we were moving from horse and cart to a car people had the same kind of thoughts. As we went from black and white TV to colour TV and then candlestick telephones to smartphones I’m sure there were people for and against this kind of progress. But now all of that is accepted and there is no turning back.

We used to get paid colourful notes in bright orange pay packets and now you don’t get paid if you don’t have a bank account.

Don’t get me wrong though. I love the convenience of the internet and paying bills online, using my card when I don’t have enough cash on me … and there is problem number one.

I know that I spend more when I use my card than when I use cash and that annoys me because I want all of my spending to be purposeful and not wasteful.

Dun & Bradstreet did a study about using cash versus using debit cards and they found that people spent an extra 12-18 per cent more than intended. If our average weekly spend is $1,000, that’s an extra $120-$180 per week!


I’ve got a little story for you …

There was a time early on in my marriage where we were starting a new business, renovating a house and expecting our first child. (I know right? Something about those years of being 20 where we think we can do it all!)

Weeks would go by in a blur and money would come in and out but I did not seem to know exactly what was going out. I would use money from one account and promise myself to sort it out when I got home, but that never happened.

Finally I got to that place, you know, sick and tired of being sick and tired about it and I took drastic action. I remembered back to when I was paid in cash (pretty coloured notes in yellow envelopes, remember that?!) and how great I was at managing my budget.

So with that, I began to transfer back to a cash economy within our household.

I kept all of our ‘bills’ money in an account for electronic transfers but I withdrew cash to cover our variable expenses like groceries, entertainment, transport, household, pets

I also went back to separating this money into envelopes so each expense had an allocated amount. This didn’t last long and I ended up creating my own wallet, the Personal Spending Organiser.

Every single week I had money left over when using cash. This was not the case when using a debit card.

And it makes sense: if you have a $50 note and something is $55, you don’t buy it. But if you have a debit card you’ll say something to yourself like, ‘it’s only $5’ or ‘I’ll spend less on take-away this week’, or worse still … you are so unconscious you say nothing!

Here is another study that was done in 2008 which also makes so much sense. I know that it’s always harder for me to physically part with a $50 note than a $50 balance. The invisibility of the money on the card makes me detached from the value.

Journal of Experimental Psychology: Applied contains research into the effect of payment type on consumer behaviour:

The conclusion that cash discourages spending, and credit or gift cards encourage it, arises from four studies that examined two factors in purchasing behavior: when consumers part with their money (cash versus credit) and the form of payment (cash, cash-like scrip, gift certificate or credit card). The results build on growing evidence that, as the authors [Priya Raghubir and Joydeep Srivastava] wrote, “The more transparent the payment outflow, the greater the aversion to spending, or higher the ‘pain of paying.’” Cash is viewed as the most transparent form of payment.

It does require extra effort to maintain a cash economy. I keep reminding myself that I would much prefer that $120-$180 per week in my savings account and continuing to create financial peace and freedom.


So how about it? Can you use cash and save? What do you think about moving to contactless purchasing? Do you love it or loathe it?

Michelle House

Michelle House is a Money & Life Strategy Coach, Professional Speaker, Podcast Host and Author in Waiting. She is a wife, mother of 3 gorgeous children and a business owner who understands the importance of staying on top of the day to day finances AND getting great value for money. Known as Australia’s Money Guru and Money Savvy Mum she is a regular money commentator for Channels nine’s Mornings program and can be found sharing her savvy tips at

  1. I disagree with that statement as regards to my personal spending. I like to buy things on credit card as it lets me know just exactly where I spent the money and how much I spent. I always pay my credit card on the due date, hence no further expense.

    1 REPLY
    • Me too Margaret.
      I use my c/c for everything and check my spending online weekly. I pay it off within the 30 days and have never been charged interest. Pkus I get points which see me receive a $40 – $50 voucher every three months.

  2. I rarely pay anything by card, but I have a special account set aside for when I do, and I only keep enough money in there for the things I want to pay.It means I have to make a trip to the bank if I want to use my card, which is inconvenient and makes me stop and think. I’m also aware that banking costs. and figure that I dont really need to pay someone to manage my money when I can easily do it myself. I have a small business, and pay my employees in a paypacket with real money in it. That way, they can choose to bank or not to bank.

  3. When I retired, it occurred to me how many credit cards we had between us and how little income to maintain that level of spending. I now only have a debit card so the balnce is the limit of my spending. I also have a small savings account. I only every carry small amounts of cash.

    2 REPLY
  4. I use a visa debit card for bill payments and income and a second one which is a salary packaging visa debit card for everyday living expenses like food and fuel then a buffer account as well as an investment type of account that is used for saving up for holidays.
    All separated accounts for different purposes so I do not overspend.

  5. My husband and I have one bank account specifically for bills: food, petrol, electricity etc. These are all paid through a Debit card, or set up online as regular payments. We then pay ourselves a “wage” every pension day. What my Mum always called “walk around money”. The rest is savings. Works well for us.

  6. I use cash for groceries, personal items and incidentals. I use credit card for mail and email and anything over $100 (that saves me carrying too much cash on person)

  7. When clients are swamped by debt the first thing debt management companies do is to make them cut up their credit cards.

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