A life without cash – have you ever wondered how it would be? In today’s world, it is possible to live without cash, but you are likely to face many issues along the way. But it doesn’t mean that it doesn’t have its benefits – going cashless can help a lot in improving your finances.
It’s good news that some countries are even taking steps to become a cashless society. But first –
What does the term ‘cashless society’ mean to us?
According to Fredrick Ramsey, one of the top-rated financial advisors on UpWork, a cashless society is just what the name suggests – a cashless society is such a society where cash in physical form wouldn’t exist, and that means, if any country were to be a cashless society, then, that would mean that there will be no dollar bills, and even the coins wouldn’t exist, which means, you will have to make payment through other ways.
As Ramsey further explains, in a cashless society, if you want to buy something, then, you can get the item, but to pay for its expenses, you won’t be able to give any physical money, rather, the process will be electronic such as you can use cards to pay for your purchase with options ranging from gift cards, credit cards, debit cards, and even prepaid cards.
Of course, paying by cards won’t be your only option – you can also make do with apps or other such contactless options as many vendors will accept payments made through such apps or contactless versions. Likewise, you can also link your bank account to payment services such as PayPal.
Alternatives such as bitcoin will also make the rounds, plus there’s also the QR codes, the black and white squares in pixelated form, and which can be used to make payments.
But the sad news is that there is no cashless society today – we can decide to be a cashless society, but on occasions, paying in cash may be our only option, and when that happens, we will either have to find cash or skip making that transaction at all.
Is going cashless a necessity?
According to Dr. Harris Owen, who’s a professor at the University of Grenoble, in the field of Corporate Finance and Financial Analytics, going cashless is not a necessity, but for some people, it can have a whole lot of meaning behind the term.
Living in a cashless society means you don’t have to carry cash and coins, but to make transactions, you will need to have at least one credit or debit card with you. Depending on the vendor, you can also take the help of either apps or online banking, and there are various other cashless payment methods that you can opt for. The more options that you have for payments, the more successful you will be living a cashless life.
Can going cashless track your finances?
As previously mentioned, going cashless is not exactly important, but preferring a cashless life does have its benefits.
In the words of Dr. Owen, if you make payments in a cashless society, they are sure to be recorded as a statement somewhere – and add to that, credit and debit card statements, bank statements, and the transaction history from the payment apps, and even online banking, all of these will track your single purchase.
Not only that, but the transaction history will also mention the date when’s the transaction is made, where, and when it is made.
And this is where, Prof. Lara G. Giardina of Strasbourg University in the field of Credit and Credit Risk Analysis, mentions that a cashless society wins. If you use cash for making payments, then that means you will need to keep track of each transaction manually. You may even need to make an excel spreadsheet to keep track of your cash data because if you don’t keep it, then you likely won’t be able to keep track of your expenses.
But if you prefer the cashless way, then, Prof. Giardina, points out that it can be very beneficial for you. Since making payments in a cashless society will record a statement of your transaction, so, you can take assurance in the fact that you can take the help of the transaction data to keep a list of all your expenses. Plus, this can be particularly helpful if you use multiple cards or even payment methods for making transactions.
That said, there are also many tools that you can use to keep track of your data. Tools such as ‘Personal Capital’ can help to connect all of your accounts and aggregate all of the data for you by providing detailed insight into your finances without you having to do it manually.
Apart from that, Prof. Giardina advises that one can also use the features of bank account and credit card – she suggests discussing with the bank officials to create an alert for you when you reach your credit limit.
Going cashless help to keep your finances safe
Worried that your cash will be stolen?
Dr. Owen advises switching to a cashless lifestyle – in his words, if you keep cash with you, then, there’s a fear that it will get stolen, and then, it’s gone forever.
But if you go cashless – and you will have a credit or debit card with you, no doubt – then, even if your card gets stolen, they usually have protections put in place that will prevent you from losing money. You can cancel the card and issue a new one, plus, even if unauthorized transactions are made during this time, the card will reimburse you.
So, then, is a cashless society the answer?
The idea of not having to carry cash is certainly tempting, but as Prof. Giardina is quick to point out, that going fully cashless can pose a problem on certain occasions.
Digital payment methods require power to authorize the transactions, and if by any chance, the power goes down, then the card transactions won’t get approved. Plus, if you plan to give a surprise gift to your loved ones, and say, if your card is closely monitored, then, you can’t hide the surprise from prying eyes.
That’s not all – many shop vendors don’t accept card payments, and in cases like that, your only option will be to skip that vendor.
Until a country truly transforms into a cashless society, Dr. Owen mentions that opting for cash will be the best solution. While a cashless society can be ideal for many, but there are chances that there will be transactions that will require cash – and opting for going cashless means that you will need to prepare yourself when such issues arise. However, it won’t hurt to prepare yourself a few other cashless options if you truly plan to go cashless.