6 reasons why I love cash

Last month my colleague Karen Datko linked to a post from personal finance blogger "Broke Grad Student." The short essay, "6 reasons why I hate cash," seemed at least partly tongue in cheek, especially since a couple of days later he followed up with reasons to love money. Yet the underlying sentiment -- plastic rules, cash stinks -- seemed genuine.

Broke Grad Student wrote his piece after making an ATM run to buy food at his workplace cafe. "Having to make the trip to get the cash (annoyed) me," he wrote. Good grief -- hasn't this man ever thought about getting cash back with a purchase from the supermarket or drugstore? Or, for that matter, about packing his own lunch? 

The blogger further groused that cash is "easy to lose." Just about everybody misplaces moola, he claimed, and afterward "you can't call an 800 number and have them cancel your $20 bills."

Yeah, and if you lose your credit or debit card and don't have any cash on you, good luck with that cab ride.

We've got coins that go jingle, jangle, jingle
Maybe he was kidding. Maybe not. But here are my six reasons why cash is cool:

1. It reminds you how much you’re allowed to spend. On a cash-only system you know that once your walking-around money is gone, it's time to go home. Plastic makes it easy to announce, "Next round's on me, and let's get some food too!" You might not do that if you had to take actual money out of your wallet to pay.

2. Cash reminds you how much you earn. Suppose you get paid $10 an hour. (Hi there, all you stunned college graduates!) You want to buy a shirt on sale for $20. Hold a double sawbuck in your hand: It represents two hours of stocking auto parts/answering phones/selling bagels. Is it worth two hours of your life just to get another garment? Maybe, if it's a really cute shirt. Probably not, though.

• Bing: What is your time worth?
  

3. "Change sucks," the PF blogger wrote. Sometimes it does. But coins can also be a painless way of saving if you throw all you have into a jar every night. Someday, you might be able to buy a truck with your stash. Most of us, though, will just be happy to bank some extra dollars -- that is, if we can find a bank that will accept the coins.

More reasons to love that lucre
4. Tossing all your dollar bills into a jar is a faster way to set aside some dough. It's helped some Smart Spending message board readers to save upward of $500 so far this year. A Boston-area woman who saves all $5 bills ended up with more than $12,000 in three years. 

5. Paper money "folds, wrinkles and tears," Broke Grad Student griped, making it hard to fit into a vending machine. So why not use those horrible coins instead? (Or skip vending machines.)  Furthermore, a wrinkly bill is still legal tender whereas a cracked credit card or one with a damaged magnetic strip spells trouble. You can still use it for online shopping, but a restaurant or store is likely to want an intact card.

6. Finally, the blogger noted that cash is "hard to split" -- when everybody pulls out a twenty at dinner, it takes time to "figure out what combination of change we need to get so everybody gets enough money back." How'd he get to be a grad student without being able to do simple mathematics? The fact is, using cash for dinner out is a great way to stay on budget because, once again, it involves the actual concept of money spent: With tax and tip, I just spent two hours' worth of salary on a burger, fries and beer. If you use plastic, it's easy just to sign and forget.

You wanna play, you gotta pay
Look, I've got nothing against plastic. Instead of going to an ATM for my own walking-around money, I get cash back with debit card purchases. Frankly, ATMs make me nervous; I wonder if I'm going to get robbed.

The rest of the time, I use a credit card in order to get frequent flier miles. In fact, I just cashed a bunch in last month for a really frugal trip to see family and friends. Rewards and cash-back programs can be great if you play your cards right, so to speak. Broke Grad Student gets money back each year. He also pays his bills in full each month. 

Not everyone has that kind of self-control, which is why I'm concerned when people eschew cash entirely. Swiping a credit or debit card can give the delightful feeling of just having obtained what we want without actually having paid for it. 

That is, until the monthly statements arrive and we realize just how much we actually did pay. Plus interest. Ka-ching!

Published May 5, 2008