Smart money’s on cash
DITCH the bank card and make a switch back to cash.
That’s the advice from a financial expert, who says the reliance on tap-and-go cards is fuelling overspending.
Deakin Business School lecturer Campbell Heggen said those wishing to keep track of their money should be withdrawing a set amount of cash each week to cover daily expenses.
“The tap-and-go economy is designed to make it easier to separate you from your money; buy now, pay — and think — later,” Dr Heggen said.
“Research suggests that people who pay by credit card instead of cash increased the amount of money they’re willing to spend, so if you set yourself a cash allowance, that can become your self-imposed precommitment to spending.
“The pain of paying is far stronger with cash than with credit cards, because cash feels more real than the idea of paying with a card, and the pain is immediate versus delayed, so we care about it far more.”
Dale Bish is one of many consumers around Geelong to join the shift away from using cash.
“I use my card a lot more than I used to. It’s just easier to tap-and-go,” he said.
“It’s possible I’m spending more (as a result). It’s a bit of a mental thing — not handing over cash.”
Meanwhile, another Deakin academic said the ease of spending associated with hitech tools was only set to get worse.
Deakin Business School associate professor Victor Fang said 2018 would likely see the continuing rise of “fintech” — financial technology revolutionising activities such as money transfers, loans and payments via smartphone.
“The general public, particularly younger customers and investors, are so tech savvy now and the technology is mainstream enough that we’re closer than ever to the point where your wallet could be entirely replaced by your smartphone,” he said.
Dr Heggen has put out a number of tips to help people save money this year, which included setting small and immediate goals rather than revolutionary changes.
“While having big, audacious goals is fine, breaking them up into smaller and more realistic targets makes them easier to achieve,” he said.
Dr Heggen said another worthwhile tactic for those looking to boost their bank balance this year was sharing their financial goals and budget plans with family and friends.
“Just like having a workout partner can help you achieve your personal fitness goals, talking through your financial goals with friends and family can help keep you motivated and accountable to stay on track,” he said.
“It also helps to let others around you know why you’ll be skipping out on some of those expensive social engagements.”