Australia is heading towards becoming a cashless society, and while it might be more convenient for some, there’s an unexpected downside for your finances.
Video transcript
Australia is heading towards becoming a cashless society, and while it might be more convenient for some, there’s an unexpected downside for your finances.
Researchers have analysed more than four decades of evidence to see how the payment method you use impacts your spending habits with the conclusion being if you wanna save money, pay in cash, report author Alex Belly told Yahoo Finance.
This was because of a phenomenon known as the cashless effect, which traces back to the 19 seventies.
Belly said.
The cashless effect is the phenomenon of spending more money but also buying more products when paying by cashless methods.
In comparison to cash, it’s theorised.
People spend more money with cashless payments because it bypasses the pain of paying, Belly explained.
When we make consumption decisions and purchases, we tend to feel some pain and some happy.
You can feel pain because you’re not sure if you can justify the purchase you made or because you feel guilty about buying a certain product.
When you pay with cash, you usually have to physically count out your money and hand it over, which could make it feel more painful in comparison with cashless payments.
You don’t lose anything tangible and simply need to tap or swipe your card so the transactions can feel less painful.
What do you think?
