Cashless spending has long been a convenient way to make purchases, and that convenience became even more evident in 2020. The outbreak of the novel coronavirus COVID-19 in the winter of 2019-20 forced people across the globe to change how they live, and those changes even affected how items are paid for.
According to the Centers of Disease Control and Prevention, touching or handling certain items, including cash, could expose people to the COVID-19 virus. That led many people to rely more heavily on cashless payments, including traditional options like credit or debit cards, but also relatively new cashless options, including apps such as Venmo. While these options can be very convenient, cashless payments can make it more difficult for people unaccustomed to making purchases without cash to monitor their spending.
The following are some tips to make it easier for consumers to monitor their spending when they’re not using cash.
• Use an app to track spending. If you’re using an app like Venmo to make purchases, you can just as easily use an app to track that spending. Mint is a free app that automatically updates and categorizes how your money is spent. Users can see how they’re spending their money in real time, making it easy to know where they stand with their finances.
• Recognize the temptation associated with cashless spending. Studies have shown that cashless spending tempts people to spend more than buying with cash. A recent study from the Massachusetts Institute of Technology asked business students to bid on basketball tickets. Some participants were told they would eventually have to pay with cash, while others were told they would need to use a card. Those who paid by card spent more than twice as much as those who were told they had to pay with cash, which illustrates just how easy it is to spend more on transactions that do not involve cash. By recognizing that temptation in advance, consumers can better prepare themselves to remain disciplined when using cashless payments like credit cards or mobile apps like Venmo.
• Pay off your balance each month. If your preferred mode of cashless spending is credit cards, then make sure you pay off your balances each month. This not only saves you from potentially hefty interest charges, but the knowledge that you will need to pay off your purchases at the end of each month can help you stay more disciplined with your spending.
Cashless payments have made it easier to purchase goods during the COVID-19 outbreak. But it’s imperative that consumers take steps to control their spending when going cashless.