Short on cash? No problem! Just bring out your credit card. Punch a few numbers on your computer screen or swipe the card at the store. Technological advances have changed how we use money. Yet, there are good reasons for choosing to pay by cash instead.
1. Regulate spending
Paying by cash allows you to set up a safety net against overspending. That is because you can only spend what you have. Let us say you go shopping and fall in love with a set of high-end speakers. But you are out of cash. Admit it, you would think twice before buying it if you have no credit card.
2. Restrict overpaying
Purchases made by credit card need to be paid for later. Sure, you bought the speakers. But are you happy about paying every month for an extravagance that you could have delayed? Paying only the minimum amount due on your credit card bill is a bad idea. You are simply attracting more interest on the debt.
3. Prioritise needs
Spending in cash allows you to rethink your priorities. You can budget and prioritise your needs. You could have purchased the speakers. But since you have limited cash, you may buy something that is more essential. Instead of buying speakers, you may choose to carry out repair work at home.
4. Trigger savings
By relying on cash more than on credit, you build a base for future savings. Cash helps you to stick to your budget and avoid overspending. This leaves you with good financial habits. Your credit history would remain healthy as a result. Moreover, you are likely to have more money to set aside as savings.
5. Avoid risk
Technology comes with its own set of disadvantages. Identity theft is a major risk associated with credit cards. But there are other risks. Imagine the threat plastic money can pose if you begin to default on payments. What if someone steals your card and uses it to make expensive purchases?
Of course, there are situations where using a credit card is unavoidable and necessary. But being judicious in your use of credit and cash will help you strike the right balance.
1. Regulate spending
Paying by cash allows you to set up a safety net against overspending. That is because you can only spend what you have. Let us say you go shopping and fall in love with a set of high-end speakers. But you are out of cash. Admit it, you would think twice before buying it if you have no credit card.
2. Restrict overpaying
Purchases made by credit card need to be paid for later. Sure, you bought the speakers. But are you happy about paying every month for an extravagance that you could have delayed? Paying only the minimum amount due on your credit card bill is a bad idea. You are simply attracting more interest on the debt.
3. Prioritise needs
Spending in cash allows you to rethink your priorities. You can budget and prioritise your needs. You could have purchased the speakers. But since you have limited cash, you may buy something that is more essential. Instead of buying speakers, you may choose to carry out repair work at home.
4. Trigger savings
By relying on cash more than on credit, you build a base for future savings. Cash helps you to stick to your budget and avoid overspending. This leaves you with good financial habits. Your credit history would remain healthy as a result. Moreover, you are likely to have more money to set aside as savings.
5. Avoid risk
Technology comes with its own set of disadvantages. Identity theft is a major risk associated with credit cards. But there are other risks. Imagine the threat plastic money can pose if you begin to default on payments. What if someone steals your card and uses it to make expensive purchases?
Of course, there are situations where using a credit card is unavoidable and necessary. But being judicious in your use of credit and cash will help you strike the right balance.
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