A frugal practice: Use cash

Here's an excerpt of my conversation with JR from Insisting Simplicity in which he shared with me a simple frugal practice we can all use to spend less. (You can listen to the audio version of this segment of the conversation or the full episode.)


Do you have any specific frugal practices that help you save money?


Yeah. Oh my God. Gazillions. They're all stupid. But that's the thing—as with anything, it's gamification.

If you use cash, which less and less people do, and especially in post-COVID, we might be a cashless society, but again, that's a totally different conversation.

Research suggests that, if you use a credit card, you are more inclined to make impulsive purchases.1 If you have actual dollars in your hand, it's harder to part with them. It's also harder to part with them if they are larger denominations. So one thing that you can do is... Just carry some cash and really think about it and have them in larger denominations. And that alone will maybe make you a little bit more hesitant, maybe make you a little bit more mindful of those purchases that you're making.

And that could lead hand in hand with another stupid little thing, which is not stupid, but you have a change jar or a little thing, whatever, every time that you go and spend that cash—say it's a $20 bill—and just like some of the banks and FinTech companies, they'll do this electronically automatically with your credit card or debit card, you take that cash and whatever change you have, you put it in your jar and you forget about it.

Then you come back to it like a year later, all of a sudden, now you got some money. Do something with that. Put it somewhere. Buy something that you've been thinking about for a while. You didn't buy it impulsively because you've had this little bucket over here building for the last 12 months. So you could buy it in a responsible way.

Listen to the full conversation with JR from Insisting Simplicity.

  1. Raghubir, Priya & Srivastava, Joydeep. (2009). The Denomination Effect. Journal of Consumer Research. 36. 701-713. 10.1086/599222. 

April 27, 2021
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