Spending with cash vs credit cards - psychological wizardry?

[anni]

I was fussing around in Personal Capital this morning after going on a small home goods shopping spree for my new apartment. I couldn't get the app to refresh most of my primary accounts, so instead I did some manual math on everything I've bought over the last couple of weeks. It's been.... a lot! More than I realized, because purchases have been made across many different cards to optimize points.

I can't help but wonder - if points were not in the picture and instead I'd used my debit card and every purchase was immediately debited from my checking account, if I might have spent less, tried harder to buy more things secondhand, or delayed some purchases. And there are other expenses I might have skipped entirely if it weren't for discounts offered by my cards (like a free DoorDash membership). I pay my cards off in full, but sometimes the balance creeps up on me in a way that I think would be more obvious if I were paying for everything immediately.

I reckon I'm getting $200-$300 back in credit card rewards annually plus whatever sign-up bonuses I get that year (maybe $400 average). But I wonder, would I save even more than that if I just skipped the cards entirely? Research says maybe... I know you lose out on purchase protection with a debit card, but in the last 5 years I've disputed maybe 2 small CC purchases.

What about you guys? Do you think your spending is the same regardless, or have you experimented with cash-only?

[phildonnia]

I think that humans are really bad at comparing costs.  This is why people will overpay for things in order to get a small bonus; drive across town to get a lower price on gas; buy stuff they don't need because it is on sale; or get an unnecessary home improvement so they can get a tax deduction.

I've done all of this in my long consumer lifetime.  You can try to be rational; but merchants are constantly developing new tricks to appeal to the subconscious animal.  It's an ongoing arms race.

I know that Dave Ramsey is a big believer in the psychological effects of credit cards, even without a bonus.  This is why he recommends not using credit cards, even if you're a responsible person who doesn't keep a running balance.  According to him, the psychological impact of losing your dollar bills forever is more significant than showing a piece of plastic which you keep, and leaving with something nice. 

But then, he recommends using debit cards, which would seem to have the same problem as credit cards?!

I have not noticed this effect in myself; but of course, we are all very poor judges of our own psychology.  I do think that knowing you are getting a bonus skews the purchasing decisions.  Which is fine; the price is effectively lower, and that should change the calculation.  Ah, but we don't exactly make decisions by comparing the price to the value; we compare the price to some arbitrary "correct" price that is more or less set by the person who wants you to spend. 

I have not experimented with cash-only; I've done exactly the opposite.  Since the Covid-19 age, I've sworn off of those disgustingly filthy scraps of rag.  I have a $5 bill in my wallet that has been there since March, and I wonder if I might one day put it in a scrapbook.  But that's another topic.

[Queen Frugal]

Using cash never helped me spend less. I have tried the envelope method a few times. All it would take is a couple annoying trips to get gas and have to go in to pay with cash and I would quit. It never curbed my spending either.

I have found time is the best cure for my wants. For example, I find that leaving an item in my Amazon account for 2 weeks usually helps me realize it is an item I can do without.

[Roadrunner53]

If some scammer gets your debit card number they could wipe out your checking account.

This is what I was told from a customer service person at Costco. She told me she knew a person who would buy something at Costco or any store, and the woman would immediately go out to her car and 'pay' off the amount thru on line banking. That way she would be able to keep up with her charges and not over do it. When she got her CC bill at the end of the month, her charges were paid off and she was able to get the bonus bucks (rewards program). Plus, she was able to keep an eye on her checking account at the same time.

A little bit of work but doable.

[secondcor521]

Most people, including most people on MMM and including me, will doubt that switching to cash or debit card would reduce their spending, because they are Disciplined(tm) and Smart(tm).

When I did switch from credit to debit, I did observe a noticeable reduction in spending - probably 15% to 20% less.  The "pain" of spending and seeing the checking account balance drop, the "immediacy" of the debit happening that day vs. 30-45 days later, and the "drip drip drip" of multiple different purchases resulting in multiple different subtractions from the checking account rather than one large amorphous unattributable blob of CC balance due later were all factors.

To all of us Disciplined(tm) and Smart(tm) MMMers, I'd say don't knock it til you try it.

Full disclosure:  I now use a cash back credit card for all my purchases, because the 15% to 20% difference doesn't matter.  After a decade or two of good decisions and exponential growth, you'll end up with more money than you need and then more money than you know what to do with.  Knock wood and YMMV.

[Sanitary Stache]

I go through every purchase on all our cards and bank accounts twice a month at least, paying off balances as I go (though there are months I do not meet this rigorous schedule).  I record them in my spreadsheet and compare them to what we budgeted.   

I find that reviewing all expenditures in our budget at the end of a month and setting the budget for the next month is enough to control our spending.  What we do do is try to not spend more in a month that we budgeted.  This gives us an artificial "restart" with each month, but also makes it easier to stop when the budget has run out.

"No more gas budget? I guess we can't drive any more this month." "No clothes budget this month, We can budget for socks and buy them next month."  DW is usually very strict about waiting until we have month in the budget for something.

[NotJen]

I've always kept a "checkbook register" of all my credit cards, so I could balance against the statement and catch any errors.

So, for me, a credit card is almost the same as a debit card - since I have the register and can see the total increase every time I make a purchase - I still see the "pain" of each purchase.

Rewards are a great bonus, and I do my best to maximize them, but they have never been an enticement to spend for me.

If some scammer gets your debit card number they could wipe out your checking account.

This is what I was told from a customer service person at Costco. She told me she knew a person who would buy something at Costco or any store, and the woman would immediately go out to her car and 'pay' off the amount thru on line banking. That way she would be able to keep up with her charges and not over do it. When she got her CC bill at the end of the month, her charges were paid off and she was able to get the bonus bucks (rewards program). Plus, she was able to keep an eye on her checking account at the same time.

A little bit of work but doable.

My dad got a credit card from one of the home improvement stores in order to get the discount.  After he makes a purchase, he walks over to the customer service desk to pay it off!  He was anti-credit card for a while when we were growing up, and is a big user of cash, but also appreciates a deal now that he's retired.

I have always been averse to debit cards - I think things may be getting better - but it's so easy to deal with a fraudulent charge on my credit card - it would be much more stressful for it to affect my checking account.

[Samuel]

Most people, including most people on MMM and including me, will doubt that switching to cash or debit card would reduce their spending, because they are Disciplined(tm) and Smart(tm).

When I did switch from credit to debit, I did observe a noticeable reduction in spending - probably 15% to 20% less.  The "pain" of spending and seeing the checking account balance drop, the "immediacy" of the debit happening that day vs. 30-45 days later, and the "drip drip drip" of multiple different purchases resulting in multiple different subtractions from the checking account rather than one large amorphous unattributable blob of CC balance due later were all factors.

To all of us Disciplined(tm) and Smart(tm) MMMers, I'd say don't knock it til you try it.

Full disclosure:  I now use a cash back credit card for all my purchases, because the 15% to 20% difference doesn't matter.  After a decade or two of good decisions and exponential growth, you'll end up with more money than you need and then more money than you know what to do with.  Knock wood and YMMV.

Yep, it's all about not letting the "pain" of paying get too far separated from the actual spending otherwise money can just leak away. Using cash (or debit) is one way to do it but just paying your credit cards down to zero more often works nearly as well. I clear balances every 1-2 weeks. Takes 2 minutes and keeps me from that end of the month "ooof" moment.

[Villanelle]

What if you require yourself to pay off every charged expense as soon as you get home.  You spend $127.78 at Target, you have to go home and transfer $127.78 to your credit card immediately. 

That might give you the feeling of actually spending the money, and you'd see your account balances shrink as you do if using a debit card. 

[Roadrunner53]

I prefer using my CC and never use my debit card anymore. I am afraid of getting my debit card scammed. I have had my CC hacked 3 times in the last couple of years. If I see a bogus charge on my on-line statement, I call immediately and report it. They investigate it and I am never charged for the bogus amount. They issue me a new card immediately. I also had problems with a few vendors and stopped payment. I purchased some dog flea collars from some pet supply. About 2 months went by and no collars. I contacted the CC company and they refunded my money. Turns out, many people complained about this company. Well, the items did finally arrive but I didn't want it by then. I had purchased from a reputable company and had the items for a few weeks. This dog supply company that took months to send the collars was from a another country. I think they are in the UK but the stuff was shipped from China. I just didn't bother with the package and never even opened it. Finally, I start getting emails that I owe them for the collars. I said I didn't want them and to send a return label. They said they don't do that. I have to send it back and pay for the label. I told them I wouldn't do that. We went back and forth a zillion times. Then they started calling my home phone and leaving messages. I ignored it. So far, they have stopped calling. I still have the package and it is still unopened! They started getting desperate and offer the stuff for 40% off.

[Metalcat]

No, none of it makes any psychological difference to me.

If it's making a difference for you, then absolutely start looking at those behaviours closer and try to understand them.

Over time though, the goal is to have a very rational and realistic relationship with money, so eventually, it won't matter.

[Rosy]

Admittedly, it took me a while to figure out what works for me.
It is indeed all psychological - money triggers emotions, at least for me:).

All cash - no way, the envelope system - OMG kill me now - I was rabid within a week of using that system:).
Debit card - on the surface seemed like a great choice that would cause me to rein in my spending.
Instead, it triggered feelings of, "do I have enough?". It made me feel poor...UGH
I hated that feeling of unease as I checked my account to see if all is well financially, now that they immediately deducted for my purchase - hell before I even brought it home.

Credit Cards make me feel better about my financial situation, my ability to pay when the bill arrives, no problem. I know I easily have enough money to pay them off - in the future. It means I have a good financial future - R.E.L.I.E.F - :).
The reinforcement of my satisfactory financial status makes me feel better.

I can spend X a month and if it looks like X isn't going to cut it I think about whether the purchase is worth it - to me. It just means it now has to become a separate expense or temporary budget item for say three months - whatever makes sense - even getting a new credit card so I can enjoy zero interest while indulging myself now.
Yeah, like someone already said letting an item sit in my shopping basket online and re-visit in a few days is helpful.
The same goes for the store, before I take it to the register I might remove several items if I realize I've let myself be tempted and will be just as happy with a bit less or without that particular item.

I generally give myself between 10 to 30% extra in my monthly budget, so I usually have a surplus from the month before so I can get whatever I want without a second thought.
It is like Malkynn said - figure out your triggers and feelings and then devise a plan that suits you and saves you the most money yet still make you feel good about how you handle your finances.

There is no cut and dry answer- use your common sense. I've never felt so miserable as when I tried Dave Ramsey's envelope system ...

[cool7hand]

I agree that there is no right answer and you have to do what is right for you. Some people love researching down to the last penny what's the best deal and what card maximizes that deal regardless of the investment of time. That doesn't work for the wife and me. We probably do more research than the average non-Mustacian to make sure that we're not being robbed, but we don't care about saving every last penny or about having a credit card that allows us to maximize all possible rewards. We would rather take that extra time and spend it doing other activities. That's not a judgment call about others. It's a judgment call about what works for us.

[Michael in ABQ]

We went a couple of years with zero use of credit cards getting out of debt. Everything was cash with the exception of gas (debit card) and regular bills like utilities that auto-debited.

It did help, both in terms of "we have a pile of cash, it's ok to buy this one article of clothing because it's on our budget" or "our clothing budget is empty this month, we need to wait until next month to make that purchase".

However, we've since switched back to using credit cards primarily and paying them off every few weeks. I've received at least $1,000 in CC rewards and I'm up to $450 in tradeline sales this year. That should go up substantially when I start getting $125-$175 per slot in the spring vs. $25-50 now.


I definitely think the psychology of handing over a few hundred dollars bills at the grocery store made us realize how much we were really spending. But it did get to become a big hassle dealing with the envelopes and pulling out a few thousand in cash each month to fill them up.

[Laura33]

On average, yes, people will spend more with credit than debit, and more with debit than cash.  It's all about the immediate and visceral hit and knowledge of your limits.

Ever go to a place like Dave & Busters?  Remember how all those places you used to just put quarters in a slot?  Now you buy a card and just slide the card in.  Even better:  the games now cost odd numbers of credits, like 5.2 or 6.7, so you can't even do the math on the fly. 

I am smart.  I am good at math.  And I still blew something like $50 on games without even realizing it.  Because they want you to get caught up in the excitement of the play and not realize how fast your balance is going down.  Imagine having to go to the change machine for $50 worth of quarters!

I have never been a fan of cash, just because I'm usually too lazy to go to the ATM.  But you know what I used to do?  I used to write down everything I spent in a notebook the minute I spent it, and then every night go enter that into a ledger book that I used to track my spending.  It wasn't as immediate as paying cash, no, but I knew every single day exactly how much I had left in my budget in each account and how much my purchases affected that.  It made it real and visceral, in pretty-darn-close-to-real-time.

If you are trying to minimize your spending, you want to make it harder to spend than to not spend -- you need the difficulty or pain of spending to outweigh the little happy rush you get from buying whatever-it-is.  Cash works because if you don't have it in your pocket, you literally cannot spend it unless you leave, go find a bank/ATM, get more, and come back.  That "stickiness" -- that built-in pause and the obligation to go to another place and come back -- is often enough to make you think, gee, do I really need it that bad?*  Barring that kind of physical barrier, tracking your spending religiously -- as in daily, if not immediately -- works because it forces you to be accountable, and to face the consequence of your spending choice right away.  Now that I don't have my little notebook anymore, I find myself much more surprised by the CC bill every month, because I'm just not paying attention at the same level. 

tl;dr:  figure out what works for you.  But don't bullshit yourself into thinking you're immune to all those clever marketing tricks just because you're smart and savvy and paying attention.   

*Which suggests that if I were really trying to cut my budget, cash would be the way to go, because it would use my own sloth as a barrier between me and temptation.

[anni]

Really diggin this discussion... Back when I was really broke it was easy to think I was great at ignoring clever marketing and coupons and reward points and "deals." Now that I've got healthy regular paychecks, I know that I am just as susceptible as anyone else sometimes. I think the sheer number of different accounts I have is what makes it hard for me to see the bigger picture of my spending without an app like Personal Capital (which is often broken...)

I really like your ledger @Laura33 - I might try that out for a few weeks and see how it goes. But I think I might just switch all my spending to a single card instead of using a physical book. I can still have a look at the day's transactions every night on my phone.

Tracking my expenses has gotten so cumbersome because I have 4-5 different cards in my main rotation for ~the points~, I have some large purchases on monthly plans at 0% just because, I have some cards where you have to reach certain points thresholds to redeem..... it's bananas.

[Zikoris]

Pretty sure I spend less than anyone I've ever met who only uses cash, and I use credit wherever possible. In my case it's actually not for the points, it's for ease of tracking and bill-splitting - we have joint credit cards that I track, but each only pay for our own things and half of joint things. It makes for much simpler math to just use credit cards for that sort of situation.

I honestly don't see how it would make any difference in our case. We're very deliberate about everything we buy, and approach things from a minimalist and zero waste perspective first, financial second. We don't impulse buy at all. We're very very close to zero food waste, like maybe once in awhile some cilantro goes off and that's it, so we definitely don't buy more groceries than we need or anything like that.

The whole thing just seems weird to me. Like, if you know you're paying with a credit card you just buy a bunch of extra crap you don't need? What if you had both cash and a card in your wallet and didn't make the decision about how to pay until you were at the register? Would you suddenly decide to run back and grab more because you picked card? It's just weird.

[HPstache]

Most people, including most people on MMM and including me, will doubt that switching to cash or debit card would reduce their spending, because they are Disciplined(tm) and Smart(tm).

When I did switch from credit to debit, I did observe a noticeable reduction in spending - probably 15% to 20% less.  The "pain" of spending and seeing the checking account balance drop, the "immediacy" of the debit happening that day vs. 30-45 days later, and the "drip drip drip" of multiple different purchases resulting in multiple different subtractions from the checking account rather than one large amorphous unattributable blob of CC balance due later were all factors.

To all of us Disciplined(tm) and Smart(tm) MMMers, I'd say don't knock it til you try it.

Full disclosure:  I now use a cash back credit card for all my purchases, because the 15% to 20% difference doesn't matter.  After a decade or two of good decisions and exponential growth, you'll end up with more money than you need and then more money than you know what to do with.  Knock wood and YMMV.

I agree with this.  This forum is filled with people who are super disciplined with their money... and there are not many who think or even admit that they spend more with CC and feel that the perks outweigh all.  However, there are studies out there, (google "study cash vs credit card McDonald's") that show that the average person spends something like 15% more when using plastic vs. physical cash... they did this study at a McDonald's a number of years ago, I have heard it was the reason McDonald's was the first fast food to accept CC... because people literally spent more.  It should be noted that this is Debit OR credit cards vs. physical cash.  Now again, this is for "normal" people, and this forum is definitely not filled with normal people.  I will say that when my wife and I started to get our finances in order about 8 years ago, we did the cash envelope method for almost two years and we absolutely reigned in our spending... we are back to using credit now, we do like our Citi Costco card.  I do wonder if we are "normal" or not.  I absolutely encourage anyone to try a cash envelope for your grocery spending for a few months and see if you notice a physiological difference in your spending behaviors.

[Zikoris]

I don't think it's even necessarily a question of discipline. I don't have any of that. Like, literally down to the DNA level, it's just not there (I have proof). What I do have is very strong beliefs about consumerism, inspired by research I've done on the horrific impacts of things like plastic, fast fashion, the literal garbage islands, the rampant human and animal exploitation, and all the other horrible effects of overconsumption. I would feel like an absolute piece of shit if I bought the vast majority of items for sale in stores today, because it would mean contributing to systems directly contradicting my values and principles.

I'm not knocking discipline at all, but I do think people should be aware that there are alternatives to it for those lacking. Namely, automated systems and/or a values/principles-based approach to life.

[John Galt incarnate!]

I was fussing around in Personal Capital this morning after going on a small home goods shopping spree for my new apartment. I couldn't get the app to refresh most of my primary accounts, so instead I did some manual math on everything I've bought over the last couple of weeks. It's been.... a lot! More than I realized, because purchases have been made across many different cards to optimize points.

I can't help but wonder - if points were not in the picture and instead I'd used my debit card and every purchase was immediately debited from my checking account, if I might have spent less, tried harder to buy more things secondhand, or delayed some purchases. And there are other expenses I might have skipped entirely if it weren't for discounts offered by my cards (like a free DoorDash membership). I pay my cards off in full, but sometimes the balance creeps up on me in a way that I think would be more obvious if I were paying for everything immediately.

I reckon I'm getting $200-$300 back in credit card rewards annually plus whatever sign-up bonuses I get that year (maybe $400 average). But I wonder, would I save even more than that if I just skipped the cards entirely? Research says maybe... I know you lose out on purchase protection with a debit card, but in the last 5 years I've disputed maybe 2 small CC purchases.

What about you guys? Do you think your spending is the same regardless, or have you experimented with cash-only?

I am certain my spending is the same.

[John Galt incarnate!]

No, none of it makes any psychological difference to me.

+1.

[Dee18]

The best way for me to limit unnecessary spending was to use a 30 day list, and require the same of my preteen.  If we wanted something, we wrote it on the list, which we initially kept on the fridge.  We could not buy it for 30 days.  I was amazed at how often the item was no longer so appealing 30 days later.  That was many years ago.  My daughter has just moved into her first post-college apartment on her own.  Last week she impressed me with her secondhand purchases:  a $35 smart tv and a $25 piece of furniture for her tv stand. 

[Metalcat]

I don't think it's even necessarily a question of discipline. I don't have any of that. Like, literally down to the DNA level, it's just not there (I have proof). What I do have is very strong beliefs about consumerism, inspired by research I've done on the horrific impacts of things like plastic, fast fashion, the literal garbage islands, the rampant human and animal exploitation, and all the other horrible effects of overconsumption. I would feel like an absolute piece of shit if I bought the vast majority of items for sale in stores today, because it would mean contributing to systems directly contradicting my values and principles.

I'm not knocking discipline at all, but I do think people should be aware that there are alternatives to it for those lacking. Namely, automated systems and/or a values/principles-based approach to life.

Same, I actually have boat loads of discipline, cargo ships really, but I don't use it when it comes to spending. If I want something and feel it's worth spending on, then I spend on it, and cash vs credit won't make a lick of difference. It's not discipline that prevents me from spending on most things, it's my belief that most things aren't worth what they cost, both in terms of literal and ethical cost.

It's easy not to spend when you think something is a bad deal. That said, I spend quite a bit more than @Zikoris, but that's a difference of priorities, not discipline.

Discipline is great for trying to get yourself to proactively *do* something because you only need discipline in the moment to get yourself to do it. It can be kind of terrible for trying *not to do* something, because that means being disciplined all the bloody time, which is exhausting.

[oldladystache]

I decide what I'm going to buy, then I decide how to pay for it. Sometimes if it's just a few dollars I'll pay cash, otherwise I'll use a card. If a lot of people do it that way it could be why they think people spend more if they use a card. Reversing cause and effect.

[NotJen]

Yeah, I can't see how using cash would actually cause me to spend less.

I have years of data tracking my expenses (due to my "checkbook register" for my credit cards - tracking is super easy).  If I switched to cash, I'd know how much to withdraw for my usual expenses for a month, so I'd always have plenty to take to the grocery store or whatever, and things would proceed as usual.  For unusual expenses, I'd research the product and the cost, and withdraw what I need.

Changes in spending happen in the planning phase, not the execution phase.

[MoseyingAlong]

Yeah, I can't see how using cash would actually cause me to spend less.

I have years of data tracking my expenses (due to my "checkbook register" for my credit cards - tracking is super easy).  If I switched to cash, I'd know how much to withdraw for my usual expenses for a month, so I'd always have plenty to take to the grocery store or whatever, and things would proceed as usual.  For unusual expenses, I'd research the product and the cost, and withdraw what I need.

Changes in spending happen in the planning phase, not the execution phase.

You have years of data tracking...i.e. you are not the typical consumer. You're at a graduate level.

For most people who are just starting to take control of their financial lives, spending cash is often the way to go. After a couple times of having to send something back because you don't have enough cash when checking out at a grocery store, most people will start to plan or run a mental tally and reduce the number of impulse buys.

This is an excellent tool. Please don't dismiss it just because you are beyond it. For many, many people it would be a very worthwhile change.

Dismissing it is kinda like a marathoner telling a couch potato that run/walking is unnecessary and a ridiculous way to start.

[NotJen]

Yeah, I can't see how using cash would actually cause me to spend less.

I have years of data tracking my expenses (due to my "checkbook register" for my credit cards - tracking is super easy).  If I switched to cash, I'd know how much to withdraw for my usual expenses for a month, so I'd always have plenty to take to the grocery store or whatever, and things would proceed as usual.  For unusual expenses, I'd research the product and the cost, and withdraw what I need.

Changes in spending happen in the planning phase, not the execution phase.

You have years of data tracking...i.e. you are not the typical consumer. You're at a graduate level.

For most people who are just starting to take control of their financial lives, spending cash is often the way to go. After a couple times of having to send something back because you don't have enough cash when checking out at a grocery store, most people will start to plan or run a mental tally and reduce the number of impulse buys.

This is an excellent tool. Please don't dismiss it just because you are beyond it. For many, many people it would be a very worthwhile change.

Dismissing it is kinda like a marathoner telling a couch potato that run/walking is unnecessary and a ridiculous way to start.

Where did you get that my comment was advice?  Where did I dismiss the use of cash?

My comment was about me personally, no one else.  Lots of people here are sharing their personal habits related to cash vs cards, per the question in the OP.

Also, it sounds like maybe you agree with me - that planning is an important part.  Making mistakes is a great way to learn - I certainly made mistakes (and reserve the right to make plenty more!) and don't judge others for doing so.

I do think cash is a great tool for some people, and I have recommended it before on the forums (if I'm remembering correctly).

(And for the record, my advice on marathons is DON'T!  They're a terrible idea, just stick with halves and you'll be happier about your life.)

[JustTrying]

Ooh! I think you should do an experiment on yourself and see what you learn if you only use your debit card for awhile. I actually think for me it would probably make a difference! I know that Dave Ramsey says that studies have shown that people spend more if they're using credit cards vs cash. I know that is 100% not true for me. Cash is essentially like pretend money in my mind! But a debit card I think actually might work for me the way that cash supposedly works for the average person!

[Metalcat]

Yeah, I can't see how using cash would actually cause me to spend less.

I have years of data tracking my expenses (due to my "checkbook register" for my credit cards - tracking is super easy).  If I switched to cash, I'd know how much to withdraw for my usual expenses for a month, so I'd always have plenty to take to the grocery store or whatever, and things would proceed as usual.  For unusual expenses, I'd research the product and the cost, and withdraw what I need.

Changes in spending happen in the planning phase, not the execution phase.

You have years of data tracking...i.e. you are not the typical consumer. You're at a graduate level.

For most people who are just starting to take control of their financial lives, spending cash is often the way to go. After a couple times of having to send something back because you don't have enough cash when checking out at a grocery store, most people will start to plan or run a mental tally and reduce the number of impulse buys.

This is an excellent tool. Please don't dismiss it just because you are beyond it. For many, many people it would be a very worthwhile change.

Dismissing it is kinda like a marathoner telling a couch potato that run/walking is unnecessary and a ridiculous way to start.

Where did you get that my comment was advice?  Where did I dismiss the use of cash?

My comment was about me personally, no one else.  Lots of people here are sharing their personal habits related to cash vs cards, per the question in the OP.

Also, it sounds like maybe you agree with me - that planning is an important part.  Making mistakes is a great way to learn - I certainly made mistakes (and reserve the right to make plenty more!) and don't judge others for doing so.

I do think cash is a great tool for some people, and I have recommended it before on the forums (if I'm remembering correctly).

(And for the record, my advice on marathons is DON'T!  They're a terrible idea, just stick with halves and you'll be happier about your life.)

Exactly, OP asked "what about you guys?" not "should I try cash only?"

If OP is asking if they should try cash only, my advice is: sure, if you think it will help, but along the way, observe your own feelings and behaviours to try and better understand your relationship with spending and why the modality makes a difference when it shouldn't.

But OP asked about our experiences, so that's what we shared, as requested.

[MoseyingAlong]

Yeah, I can't see how using cash would actually cause me to spend less.

I have years of data tracking my expenses (due to my "checkbook register" for my credit cards - tracking is super easy).  If I switched to cash, I'd know how much to withdraw for my usual expenses for a month, so I'd always have plenty to take to the grocery store or whatever, and things would proceed as usual.  For unusual expenses, I'd research the product and the cost, and withdraw what I need.

Changes in spending happen in the planning phase, not the execution phase.

......
This is an excellent tool. Please don't dismiss it just because you are beyond it. For many, many people it would be a very worthwhile change.

Dismissing it is kinda like a marathoner telling a couch potato that run/walking is unnecessary and a ridiculous way to start.

Where did you get that my comment was advice?  Where did I dismiss the use of cash?

My comment was about me personally, no one else.  .
....
(And for the record, my advice on marathons is DON'T!  They're a terrible idea, just stick with halves and you'll be happier about your life.)

@NotJen I was responding to your line
"Changes in spending happen in the planning phase, not the execution phase."
I missed the implied/unwritten "for me" in that sentence. Now I see where you were coming from.

(Personally I prefer marathons after a 112 mile bike ride. Yes, slightly insane over here.)

[Laura33]

I think the sheer number of different accounts I have is what makes it hard for me to see the bigger picture of my spending without an app like Personal Capital (which is often broken...)

I really like your ledger @Laura33 - I might try that out for a few weeks and see how it goes. But I think I might just switch all my spending to a single card instead of using a physical book. I can still have a look at the day's transactions every night on my phone.

Tracking my expenses has gotten so cumbersome because I have 4-5 different cards in my main rotation for ~the points~, I have some large purchases on monthly plans at 0% just because, I have some cards where you have to reach certain points thresholds to redeem..... it's bananas.

FWIW, the setup that you describe is precisely why I don't track daily any more.  Because when I got married, DH wanted a much more comprehensive, precise system than my little notebook and ledger book, so he created a Quicken account that tracks where all the money comes and goes.  And now I can't see the forest for the trees, and it takes 10x as long, so I just quit.

But if you really want to change your spending, I'd suggest taking a hard look at what you just wrote.  Your entire focus in this complicated plan is to make sure you spend enough to optimize rewards.  That is exactly the opposite of what @Malcat and @Zikoris are talking about, which is a ground-up analysis that starts with "do I need to spend anything at all?"  IOW, it sounds like the rewards carrot is doing its job by putting you into a mindset where you're always thinking about spending, and the only question is which card does it go on.  It's game-i-fied for you now, so you get a little dopamine hit when you figure out the best card to put XX on to optimize your rewards.  This is like me sitting down at Thanksgiving and figuring out a plan to optimize what I eat first to max the deliciousness before I go boom -- then wondering why I'm fat. 

If you want to cut back, you need to change that daily focus to weight long-term rewards more than short-term ones.*  Watching your money dance around between multiple CCs isn't going to do that -- your savings and investments literally aren't even in the picture!  It's not just what you spend stuff on or where you spend it; the more important issue is what you don't spend now because you want to be able to spend it later.  But later doesn't even have a place at your table in your current setup.  So no wonder it's getting short shrift!


*I played money games with my little ledger, too, btw.  The difference is that my money game was trying to come in under budget in all my spending categories every month. 

[habanero]

I have a multi-account system I have used for some time which probably does not reduce (or increase) spending, but it makes cashflows more even from month to month.

The 1st each month I:
- transfer my pay for that month into checking from saving. Actual pay arrives mid-month and then goes to savings account.
- transfer money from checking to a joint account my GFs, we use that for groceries etc we each have a debit card linked to it, only used for groceries/household supplies
- transfer a fixed sum into an account for paying regular expensens such as electricity, mortgage, various subscriptions, insurance etcetc. These expenses vary from month to month, some are quarterly, some are biannual. This gives me a more even cashflow from month to month. Regular expenses are paid off this account.
- Then I move a lump sum into a temporary account, this is what I expect to have left at the end of the month. I have stopped with this as of this month as I didn't see or feel any benefit from it. The psychological trick of having a lower checking account balance does not do anything for me as I know there is plenty of money in the system anyway.

All the regular transfers are set up to incur automatically every month so it's not really like I have to do much once I have set it up.

At the end of each month I move money into an account for credit card expenses incurred that month. The CC bills are paid off this account as they come in.

Then at the end of each month I am left with X when all is done. This is my indicator for actual cashflow that month, and how this varies shows me how much I have over/underspent that month vs my normal. Whatever is left is thrown at an index fund.

But as malcat, if I need/want something and think its worth it, I buy it. The setup just gives me an easy way to have more even monthly expenses. There is no way I could trick myself into believing there wasn't money available for it that particular time.

And it gives me a feeling on being on top of my money, which is probably why I like it. Any other setup would have yielded pretty much the same end outcome, I think. And I use only credit and debit cards. Hardly anyone over here uses cash anymore anyway.

[Runrooster]

What about using checks for all transactions?  Would make you rethink that $2 impulse buy.

I read one article that wasn't very convincing about the long-term value of cash over credit. They simply compared retailers with credit and without. 
People spend less because no one carries cash anymore, big surprise.
I believe I would spend less for a few months if I had to do all cash.  It's a hassle to carry around, go to an atm, can't shop online.
Then I'd adjust and simply stock more cash.

[Zikoris]

FWIW, the setup that you describe is precisely why I don't track daily any more.  Because when I got married, DH wanted a much more comprehensive, precise system than my little notebook and ledger book, so he created a Quicken account that tracks where all the money comes and goes.  And now I can't see the forest for the trees, and it takes 10x as long, so I just quit.

But if you really want to change your spending, I'd suggest taking a hard look at what you just wrote.  Your entire focus in this complicated plan is to make sure you spend enough to optimize rewards.  That is exactly the opposite of what @Malcat and @Zikoris are talking about, which is a ground-up analysis that starts with "do I need to spend anything at all?"  IOW, it sounds like the rewards carrot is doing its job by putting you into a mindset where you're always thinking about spending, and the only question is which card does it go on.  It's game-i-fied for you now, so you get a little dopamine hit when you figure out the best card to put XX on to optimize your rewards.  This is like me sitting down at Thanksgiving and figuring out a plan to optimize what I eat first to max the deliciousness before I go boom -- then wondering why I'm fat. 

If you want to cut back, you need to change that daily focus to weight long-term rewards more than short-term ones.*  Watching your money dance around between multiple CCs isn't going to do that -- your savings and investments literally aren't even in the picture!  It's not just what you spend stuff on or where you spend it; the more important issue is what you don't spend now because you want to be able to spend it later.  But later doesn't even have a place at your table in your current setup.  So no wonder it's getting short shrift!


*I played money games with my little ledger, too, btw.  The difference is that my money game was trying to come in under budget in all my spending categories every month.

Totally agree. When I'm thinking of buying something, I roughly go through these steps:

1. Can I use or repurpose something I already have?
2. If not, what would be the most zero-waste option? I.e. check my local buy nothing/zero waste group to see if someone's giving it away, buy it secondhand, buy it digitally if applicable (books, games)
3. If buying new, try to buy something that would be more likely to otherwise get thrown out by the store. Clearance things, damaged/scuffed packages, or things with cosmetic damage like scratch/dent models for appliances (my microwave has a nice dent in it but runs fine). Also applies to food - I buy the weirdest looking vegetables I can find, because nobody wants two-legged carrots or a zucchini that looks like a dick, and they end up landfilled like crazy. Also, I look for options with less/no packaging - I'm the weirdo buying floor models of fitness equipment or whatever.

If at that point I can't make any of those things work, I feel okay buying something "normally" because I exhausted the other options first. The end result of a system like this is obviously very low spending because Step 1 eliminates purchases like crazy, and 2 and 3 drop the price tremendously for the things I do end up buying. It's honestly not even worth it for us to bother chasing credit card points, especially since we can't travel now. We get some minimal amount of cashback here and there, and that's about it.

[elaine amj]

I had fun with CC points for a while and still play the game a little now. It's definitely a game but I play it whenever it is fun. Plus, it's a lucrative game.

However, I generally kept it separate from my spending decisions (wasn't always 100% successful but most of the time it worked).  This meant that I would make the spend decision first (how much do I want this, is there any other option, is this worth it?)and then decide later what card to put it on to maximize my rewards.

Money is so fungible to me that I can't see what difference it would make to me if I pay by cash, check, debit or credit. Cash would be more of a pain though as I would have to remember to restock my wallet. I also feel less secure with debit so I use credit for 99.9% of my expenses. 

I actually like shopping so I can be dangerous when I get in the mood lol. But it never lasts long and after a very short period of spend spend spend, I get overwhelmed and actually hate spending for a while. So I never do much serious damage.

I tried YNAB for a couple of years and other than the few categories where I'd go "OMG we spend THAT much on THAT?!" , it made very little difference to my spending decisions. If I wanted something and decided it was worth it, I'd just shift the money over anyway. It did gamify some things like "let's work harder to drop that grocery number next month!", but overall didn't help other than from a tracking perspective. On the good side, it pushed us to lower some regular expenses like cable and cellphones that we might have ignored for a long time more.

I think it ultimately depends on you and how you think. Analyzing what psychological factors help you make the most optimal decisions is a very good thing.