A study commissioned by Credit Karma and conducted by the Harris Poll found that crippling inflation has impacted consumers both in the U.S. and the U.K., driving them to use more cash to better manage their finances.
The survey’s findings highlighted that cash usage is particularly high among Gen Z, with 69% of this demographic group using more cash than they did a year ago. To put that in perspective, 47% of Gen X respondents said they’re using cash more than they did 12 months ago, while fewer baby boomers (37%) are as well. Furthermore, 23% of Gen Z revealed that the majority of their purchases, including groceries, clothing, and nonessentials such as coffee, are made using cash. That’s because this group is embracing cash and keeping themselves accountable when it comes to budgeting their money. They’ve found that doing so also leads to them spending less, and overall, gives them the feeling of having more control over their spending (19%).
According to Credit Karma, it’s not just all about budgeting though. Roughly 20% of Gen Z are using cash more since it doesn’t have a digital trace for the transaction, and it gives the feeling of free money. Credit Karma believes that this rationale can lead to excessive spending, making it more difficult for young people to save and plan for the future.
Cash Stuffing to Help Curb Excessive Spending
Another trend making waves among Gen Z—particularly on popular social media platforms such as TikTok—is the concept of cash stuffing. It comprises setting aside physical cash to spend on a variety of spending categories at the beginning of each month, to be used throughout the month. Once the funds have been spent, all spending is halted until the following month when the cycle begins once again.
Of the Gen Z respondents that use cash stuffing, some have reported that they use this method to save, while others use it to budget.
Courtney Alev, Consumer Financial Advocate at Credit Karma said:
“Cash can be a great tool for budgeting and saving money, especially if you’re someone who tends to overspend when swiping using debit or credit. However, whether using the cash stuffing method or simply pulling out a set dollar amount each paycheck to ensure you’re not overspending, make sure you’re still doing the work to build your credit.”
“That can be as simple as setting up monthly subscriptions on one credit card and paying it off at the end of each month or using one card to pay for gas expenses. It’s important to build credit so that you’re able to gain access to better priced financial products, like auto loans and mortgages, down the line.”
Link: https://www.paymentsjournal.com/gen-z-is-embracing-cash/
Source: https://www.paymentsjournal.com
