Yahoo Finance Young Aussie bucks cashless trend and reveals insane results: 'Gone through the roof'
Comedian Matt Hey ditched his card for recreational and in-person purchases since the start of the year and said he's saved so much money.
A young bloke has ditched the cashless trend taking over Australia and has been blown away by the effect it's had on his bank account. Aussies overwhelmingly prefer to tap and go with a card or a digital payment system like ApplePay rather than fiddle around with cash.
However, research was recently released showing people save much more money when they use physical money. Report author and University of Melbourne senior lecturer in marketing Alex Belli told Yahoo Finance this was because of a phenomenon known as the “cashless effect”.
“It's the phenomenon of spending more money but also buying more products when paying by cashless methods - whatever they are, it could be credit cards or BNPL schemes - in comparison to cash,” Belli said.
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Comedian Matt Hey has become cash's biggest advocate after effectively ditching his card and digital payment systems since the start of the year.
He's been using cash ever since and said his savings have "gone through the roof" as a result.
"Anything recreational or anything where I can purchase in person, I will always use cash and what I have found is that it makes me have a more conscious decision into what I'm purchasing," he said in a video.
The 29-year-old said there are certain areas, like rent, streaming services or bills, where paying in cash is either virtually impossible or very difficult. But he said there are so many other things he used to pay for with a card without even thinking about it.
"It does take you a bit of getting used to, to reprogram yourself to do it. But oh my goodness, in my case, it is so totally worth it," he said.
You question all your purchases when you use cash
The presence of cash has made Hey question almost everything.
"I actually find myself saying to myself, 'Do I really want to spend my money on that because then I won't have any money left to spend on potentially something else that might come along'," he said.
While some might not like the idea of having to constantly quiz your choices or desires, he said it's not all doom and gloom.
"Your financial literacy just improves so much because you are consciously purchasing things," he said.
"And because I'm consciously purchasing things, at the end of the week, I have more money left over because I have decided to not purchase as many things."
It's also to avoid a $4 billion problem
Not only is using cash helping him with his budget, Hey said he's also avoiding spending tens of dollars every month on card surcharges.
Depending on the type of card you use and how you use it when you pay, you can incur a surcharge of between 0.5 per cent and 1.9 per cent.
While it might not seem like much at the time of purchase, it easily adds up.
Research released from Canstar this year found the average Australian spent $140 last year on electronic payment surcharges. When you add that up for the whole nation, that's around $4 billion in just one year.
Aussies associate cash payments with pain
Belli said there is an element of "pain" that comes with paying for things and it's far more prevalent when cash is involved.
“When we make consumption decisions and purchases we tend to feel some pain and some happiness," Belli explained to Yahoo Finance.
"You can feel pain because you are not sure if you can justify the purchase that you made or because you feel guilty about buying a certain product.
“[Cash is] physical and you know exactly what you have.
"You can go to an ATM and take out the money you actually need, rather than having an unlimited amount of money like in the case of a credit card."
But what about the cashless revolution?
With 87 per cent of payments in Australia being digital rather than with cash, some businesses have opted to be solely cashless.
This has generated a lot of outrage from Aussies, so much so that some of these businesses have copped abuse from customers.
Hey said in the six months since he started his cash-only outlook, he's never not been able to use cash. He added that if a business didn't accept cash then he would probably leave because he's committed to his new mission.
But if trends keep going the way they're going, Hey has a little more than five years before his mission becomes more difficult.
RMIT associate professor of finance Dr Angel Zhong predicts Australia will become “functionally cashless” by 2030.
“I’m not saying that we won’t see cash at all and I’m not saying that cash will lose its value,” Zhong told Yahoo Finance. “It’s more about how digital payments are becoming the mainstream payments for consumers. The transition is well underway.”
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