My big cash experiment

For little over a year now, I've been paying myself a chunk of my income in cash. This experiment has been a fascinating journey (and a trip down memory lane) into the rapidly dwindling world of cash. This is a little break from my usual technically oriented writing, detailing my journey and the lessons I've learned along the way.

It all started around a year ago when I started working with a new business associate I had engaged to handle a few in-house projects and maintenance tasks while I focused on my client work.

Randall, a self-described "digital nomad" who had spent most of his life with an address of "no fixed abode" and was currently cruising the British canal network on a narrowboat, had a preference for cash. Since the expected total monthly value was well below the equivalent of what it would cost to pay someone full-time on the current UK minimum wage, I had no objections.

We would meet up once every 4-6 weeks for a lunch or a coffee at a canal-side pub or café. Once the business side of things was done, I would often ask about his life on a canal boat. Being 6'4" it's not something I had even contemplated, but I was curious. It was during one of these conversations that we got onto the topic of his preference for cash, and I got what in hindsight is a blatantly obvious answer: Budgeting.

He went on to explain that when he used his debit/credit cards, he almost always ended up overspending. However, with a physical pile of notes, there was a much stronger connection with exactly what he was spending. He also had a few tricks to make his money go further - for example, he would almost never buy beer in the pub with a note. Instead, when he returned from wherever he had been in the day, he would put any leftover notes back in the main pile, but the coins would go into a glass on the window sill. He only used the coins for beer - so if he didn't have a lot of leftover change, he would skip the trip to the pub altogether.

This actually bought back memories of my first NatWest savings account and collecting the "piggy family". On pocket money day I would run off to the nearest sweet shop like any other kid my age, but the change I had left would go into the piggy bank. Now and then they would be emptied, counted and paid into an actual bank account. As the balance crossed various milestones, you would earn the next member of the family.

I decided to give cash another go. This time as a grown-up!

Lesson 1 - access to cash

My business bank account is with Starling, and like all the other modern digital banks, there are no branches. So I was limited to only being able to get £300 in cash per day from either a cash machine or the Post Office.

Despite a lengthy conversation with the Bank about how this was a pittifully small amount of money these days and would require two trips just to get a week's worth of minimum-wage earnings, they refused to budge and insisted they could not increase the limit.

I managed to get into the routine of nipping to the cash machine whenever I was out shopping, after the gym, etc. and managed to stack up enough cash to cover Randall's invoice and the amount I had decided I was going to pay myself in cash each month.

Lesson 2 - spending cash

I didn't think that spending small amounts of cash under £20 would be a problem, and things might get more awkward if I had to count out more than a hundred pounds at a till. However, I found that it was the opposite.

On an occasional clothes shopping trip, it would be easy to ring up well over £100 on a few items. The stores didn't even bat an eyelid while I counted out a dozen or so £20 notes.

It was the smaller transactions where I often got stuck. On more than a few occasions in coffee shops, I found myself on the receiving end of "Sorry, it's card only". I was never determined enough to pretend that I had no other form of payment to see how far it would go. I just tapped my card or phone and marked it down as a place I would avoid for the rest of my experiment.

Lesson 3 - Budgeting

This pretty much worked out as Randall had explained it to me. Having a physical pile of notes that you could see getting smaller and smaller as the month went on led to being much more mindful of what I was spending and when.

I would take an amount from my main pile for the month and put it in my wallet and call it my weekly budget (not including any bigger amounts if I knew I was going to get something specific). Even after a little over a year of the experiment, I was still surprised at how often I would find myself pulling out the last note and thinking to myself, "Where has that all gone?"

Although it's not really budgeting, I also copied the idea of having a glass to put loose change in. At the time of writing, I have over £120 in the glass - which is more than enough for a meal out or something similar.

Lesson 4 - Data & Privacy

This is probably the topic of an entire separate blog post. So I am certainly glossing over it here and not going into too much detail.

When you walk into a shop and hand over some cash, no-one knows who you are. You and your spending habits are not being profiled or tracked. Occasionally, I was asked for my email address "for the receipt", which I would decline and say the till receipt is fine.

The same cannot be said for digital transactions. Every tap of a card or a phone links you to the things that you are buying and where and when you are buying them. If you are using a phone, that extends to Google and Apple too!

As a privacy-conscious person, this is probably the main thing that kept me going with the experiment for so long. I was happy to be in control of my own spending data.

Conclusion

I'm glad I tried this experiment. It was a great way to be more mindful of my spending habits. However, I found the benefits don't outweigh the hassle of dealing with cash.

Chip & PIN - and even more-so contactless payments - have become so universal in the UK that cash really has become redundant and even inconvenient. Especially for the smaller transactions where contactless is a lot faster. For the larger transactions, making repeated trips to cash machines over multiple days due to withdrawal caps becomes a major hassle.

Despite the privacy concerns, I'm going to go back to tapping my phone for the majority of my transactions. It's just too damn convenient.

Life Money Finance