Not Quite A Cashless Society

February 18, 2014

Winter storm Pax not only caused havoc on roads and at many airports on the East Coast last week, it also caused havoc to my husband’s lunch break.  He’s got a 4×4 monster truck so a foot of snow didn’t keep him home from work nor did the snow stop him from heading out for lunch at the nearby McDonald’s. A few workers had managed to get in and open up for the day, but the storm had knocked out power so the place was running on a generator.  The sign on the front door, “cash only,” had Dave digging around in his truck for enough coins to order something off the dollar menu.  Would you have had enough cash in your own wallet in this situation?

This got me wondering how much of a cashless society we really are.  According to a recent study by Mastercard, the United States is reaching the tipping point of becoming nearly cashless, with an estimated 80% of consumer spending being cashless.  Surprisingly, the report identifies Belgium (where an estimated 93% of the value of consumer spend was cashless), France (92%), Canada (90%), the UK (89%), Sweden (89%), Australia (86%) and the Netherlands (85%) as countries where cashless payments are much higher than here in the U.S.

I usually suggest trying to spend only cash for day-to-day expenses as a way to get a better handle on spending with the envelope system.  I know that sounds old school, but in countries such as Germany (where an estimated 76% of the value of consumer spend was cashless), Japan (62%), Spain (54%) and Taiwan (43%), cultural behavior appears to be keeping cash usage higher than market conditions would suggest, so it seems I’m not alone in this spending approach. Even if you prefer to use a debit or credit card for convenience or for tracking your spending, it is always a good idea to carry around at least a few bucks in your pocket in case you also run into a “cash only” sign.