Cash Is King, But Do You Really Spend Less When You Pay With It?

I listen to The Dave Ramsey Show almost every day when I am walking to work. One of his favorite phrases is that “Cash Is King”. He also argues (with good references) that people spend more when they use credit. He states that a recent study found that individuals typically spend 12-18% more when they use credit vs. cash. It’s hard to argue numbers like that, but I am going to try!


Cash Burns a Hole In My Pocket

Yeah, you read that right. Cash burns a hole in my pocket and I always find something to spend it on. Whenever I carry cash, I just think of it as play money. It’s something that I can just take into a convenient store and spend until it’s gone. It’s just begging me to spend it! So, in the past few months, I have stayed away from cash and it’s devilish qualities. But why was I like that with cash? According to Dave Ramsey, it was supposed to help me curb my bad spending habits. 🙁

Credit Is Just As Bad

Back in the days when I was still using credit cards, my problems were just as bad as they were with cash. Everyone knows that easy access to credit can get you in deep trouble. To be honest, it got me in trouble quite a bit. I was buying things I didn’t need and adding things to the cart because I could. I guess you could say that I did spend more because I used a credit card. I spent more because I knew it wasn’t coming out of my checking account.

What’s The Answer?

I knew there was no way that I could handle the cash envelope system. It was just too tempting to grab some cash out of another envelope and spend it on something else. I know a lot of you are going to say that I had no self control, and I can tell you that you are probably right. However, I wanted to fix the money problems and I took the necessary steps to correct them. Today, we solely use our debit card and checks. We also are using a software program that allows us to spend all of our money on paper before the month is even over. Ever dollar is accounted for and if we spend more money on another category, we have to cut back on something else. It’s working for us and it seems like the ways of the past are gone!

Do you see a difference when you use cash vs credit? What works best for you when it comes to spending temptations?


My name is Adam and I am in debt. Yep, I came out and said it in the first sentence. I hope that shows you how passionate I am about getting out of debt and enjoying life in the process. Join my wife and me on our journey and be sure to contribute to the great discussions. You can get FREE email updates about the site as soon as they are posted. If you would like to hear our whole story, visit my about page. Thanks for visiting!

17 Responses to Cash Is King, But Do You Really Spend Less When You Pay With It?
  1. Miranda
    October 29, 2009 | 10:29 AM

    I find that cash is harder to keep track of. I can’t go back and analyze exactly what I spent, unless I am really careful to keep track. I actually do better with credit and debit because it’s easier to keep track of my spending because there are multiple records of it. Since I don’t go over my limits, and since I pay off what I put on my credit card, it really isn’t an issue for me.
    .-= Miranda´s lastest post ..The Differences Between the Flexible Spending Account and the Health Savings Account =-.

    • Adam
      October 29, 2009 | 9:56 PM

      That’s another great point. I know that I have a hard time holding onto cash, but it’s even worse when I can’t remember what I spent it on!

  2. Craig
    October 29, 2009 | 11:21 AM

    Sometimes, I believe having cash means you don’t want to see it go. I hate seeing the money decrease in my wallet, then getting spare change with purchases.

    • Adam
      October 29, 2009 | 9:58 PM

      I think people either hate to see it go or can’t seem to hold onto it. I wish I was like you!

  3. Matt Jabs
    October 29, 2009 | 11:22 AM

    It hurts me to spend cash. I don’t spend credit, but when I did, it gave me a unarguable disconnect between me and my money… so I spent the credit without the pain which increased what I spent significantly.
    .-= Matt Jabs´s lastest post ..Is Entrepreneurship Riskier Than Employment? =-.

  4. Yana
    October 29, 2009 | 11:57 AM

    I too find cash harder to keep track of, and don’t make much effort to have it on hand. I only have small amounts when I’m paid in cash, but they do add up because I rarely spend that way. I use debit cards and write checks when I have to. I’m meticulous when it comes to recording spending, using a DayTimer system, but have become bad at reconciling bank statements since I opted to receive them online and not in the mail. I force myself to do it every 2-3 months. I’m not really tempted to spend other than online and in the grocery store, regardless of what method used to spend. My husband, on the other hand, can’t hold on to cash. So he rarely has any, but doesn’t like spending any other way.

    • Adam
      October 29, 2009 | 10:00 PM

      It’s very rare that my wife and I have cash too. The only time we have it is when someone else gives it to us. We never get cash out of the ATM!

  5. ctreit
    October 29, 2009 | 8:36 PM

    My wife and I prefer to use a credit card, because we can track our spending better. We also pay our credit card off each month. Besides, I have the same problem as you do. Cash burns a hole in my pocket.
    .-= ctreit´s lastest post ..Setting up a budget: how we deal with stocking up. =-.

  6. Nicole @ RainyDaySaver
    October 30, 2009 | 12:15 AM

    I’m with Matt. It also pains me to part with the bills in my wallet. I take out ‘money for the week’ for gas and incidentals, and that’s it. Groceries on the debit card. It’s too easy to spend with your cards, even if it’s a debit card.
    .-= Nicole @ RainyDaySaver´s lastest post ..Halloween Candy Is Not My Friend =-.

    • Adam
      October 30, 2009 | 4:24 PM

      I would love to be able to take cash out for gas, groceries, etc. However, I think I would find lots of “incidentals” to spend it on!

  7. Lulu
    October 31, 2009 | 1:13 PM

    I hate cash as well. I only use it for doing laundry as I live in an apartment and on the very rare occasion when I have to contribute to something last minute at work. If you don’t get a receipt then it is so hard to track cash as well. I prefer to use my cash back credit cards to earn rewards, track spending and just make my financial management much easier.
    .-= Lulu´s lastest post ..Increased Bill After Doctor Visit =-.

  8. Ted
    January 29, 2010 | 12:30 PM

    I can easily spend cash. Plus, my wife hates carrying a lot of cash. She tends to lose things (yeah for ADD!). So we use to track our spending and budget. That way we stick on track daily much like the envelopes. I love to spend cash- way to easy. Cards are harder for me because a big danger sign starts flashing in my brain due to how much debt we already have.
    .-= Ted´s lastest post ..Physical: Task #1 done =-.

  9. Randy
    June 19, 2010 | 9:35 AM

    I’m pretty much the opposite. If I am contemplating buying something with cash … I give it a good hard critical look before I let go of those bills. But, if I have a credit card on me, no problem!! 🙂 For that reason, I don’t carry a credit card with me at all. If the purchase is important enough for me to go home and fetch my Visa card, then it’s probably a good purchase. Most times, it’s not worth the effort to go back and buy, once I get home!

  10. DBOTTI
    November 14, 2011 | 1:31 AM

    If overspending is a problem, possessing either
    cash or credit cards can be a problem.
    I use credit cards for nearly all purchases,
    but my attitude is I must be able pay for
    the item in full when I make the purchase.
    If this is too hard for a person to keep track of,
    it would be better to carry the minimum amount
    of cash around with you, and use checks for
    all larger purchases. This will force you to
    stop and think before completing the purchase.
    If the store does not access checks, so must the
    better, it will force you to stop and think
    even more.

  11. International
    February 8, 2012 | 12:34 AM

    Overspending may be easy both with cards and with cash, but only with a credit card you’ll spend more than you have! Same goes for mortgages and loans.

  12. Ruth
    October 31, 2016 | 8:01 AM

    I find cash very easy to keep track of. I use a combination of the envelope system and the EveryDollar app to keep me on track. Everything gets inputted into the EveryDollar app. If I spend 4 cents on a pony ride for the kids, that goes in too.

    Since going to cash (supplemented with debit cards, recorded in our budget right away) we’ve gotten completely debt free and are aggressively building savings.

    When I used a credit card, I always felt a month behind–we were paying for last month’s purchases with this month’s income essentially. That was the case even when paying off the bill in full.

    With using cash and debit cards only and promptly recording purchases in our budget, we now are paying in advance for next month’s bills, instead of paying off last month’s purchase.

    I will never go back to credit cards again.

  1. Carnival of Personal Finance #229: candy edition — the ¢entsible life
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