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Are We Really Headed for a Cashless Society?

Ever wonder if our society is going completely cashless? Maybe you’ve been shopping lately and found that more and more businesses are only accepting plastic or digital payments. And what about this whole coin shortage thing? Your neighbor’s talking about it, the frenzied news media is talking about it—so, what’s the deal with all this cashless society hype? Are cash and coins going away for good? And does a cashless society really look all that different than the digital world we live in right now?

Whew! That’s a lot of questions. Let’s break down everything you need to know (and debunk some serious junk too).

What’s a Cashless Society?

A cashless society is one where all physical money (cash, checks and coins) is completely and totally replaced by digital money—including debit and credit cards.

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You might be thinking, Wait . . . don’t we already have a cashless society now? And you’re not really wrong. While cash is king, a lot of people choose to make their everyday purchases out of convenience and use PayPal, Venmo, Zelle, Apple Pay, debit and even the one that must not be named (credit). Think about it: Unless you’re a hardcore stickler for using the tried and true envelope system, when was the last time you actually used cash to pay for everything?

Pew Research shows that in a typical week, 29% of Americans make absolutely zero purchases using cash.1 And a study by Square found that the pandemic had a lot to do with how people are spending their cash. Square’s research revealed that cash purchases went down from 37% in February 2020 and landed at 33% just two months later.2

Makes sense, right? A lot of us swipe our debit cards to pay for everything and have wallets stuffed to the brim with receipts, rewards cards and gum wrappers—anything but cash.

But a true cashless society is way different than that. It’s a world where cash doesn’t exist, no one is paid “under the table,” and every transaction you make is traceable (insert Twilight Zone theme song here).

What’s All This Talk About a Cashless Society?

Well, see . . . there’s this thing called COVID. Ever heard of it? When it came on the scene, it impacted nearly every single aspect of life as we knew it—including the way we spend our money.

People started not wanting to touch anything that someone else touched (without it being sanitized first). And what’s one of the grimiest, germ-infested things that passes easily from person to person? Hint: It’s got presidents’ faces on it. That’s right. Money. But not the digital kind—we’re talking cold, hard cash and coins.

It didn’t take long for businesses to decide they didn’t want their cashiers handling cash from every random customer coming in off the street. So they started pushing for cashless payments with only cards to limit the spread of germs. Signs like “not accepting cash” and “cards only” started popping up at stores across the country—because somehow that’s safer.

We hate to break it to you, but you still have to touch someone’s card (unless the card reader is on the customer’s side). Even then, the poor customer still has to touch the buttons on the PIN pad that someone else just touched before them. It never ends! By the way, dollar bills were always gross, even before COVID ever came along. But that didn’t seem to bother anyone then. Strange . . ..

Does This Have Something to Do With the Coin Shortage?

You’ve probably heard all about the great American coin shortage going on these days. If you lump the phrases “cashless society” and “coin shortage” together, then yeah, you might find a conspiracy theory in there somewhere  ready to jump out at you. But here’s the deal: When people stop using cash to buy things, a coin shortage isn’t super surprising.

Think about it. There’s a coin “shortage” right now because back when businesses were closed, there weren’t any coins changing hands. And even when people did make purchases, they weren’t using cash and coins to do it!

Plus, the U.S. Mint (they’re responsible for actually making the coins) had fewer staff members on hand during the pandemic. And when businesses opened back up, the need for coins was greater than the number of coins existing in the world. In other words, the real problem comes from coins not moving around out there in the wild of the economy and not from a true shortage of the coins themselves.3

If you don’t believe us, even the Federal Reserve agrees, saying, “There is currently an adequate overall amount of coins in the economy.”4 Roger that.

Add all those things up and it equals one big circulation problem. That’s all, folks. So, the next time you start worrying about a coin shortage, remember that it’s not an actual shortage. Now, take a big breath, stop looking for the boogeyman around every corner, and just be prepared to have exact change with you the next time you pay in cash.

Has the COVID-19 Pandemic Led to a Cashless Society?

Nope. We might use less cash, but there’s still a long way to go for our society to be totally and completely cashless. And just because some stores didn’t want to accept dollar bills for a while (and maybe still don’t), that doesn’t mean a cashless society is here to stay.

Think about how much of your money is virtual already. Does your boss hand you a wad of cash on payday? We’re guessing not. You probably wake up on Friday morning to a nice little direct deposit from your employer in your bank account.

You never saw the money physically. It never changed hands in person. And the only reason you even know you did get paid is because some ones and zeroes tell you that you did. Plus, you probably pay your family and friends through apps like Zelle, PayPal or Venmo—especially if you don’t have cash on hand or didn’t see your friends in person.

But remember: This doesn’t mean we live in a cashless society. You can still pull out cash from the bank and stuff your grocery envelopes with it or even slip a few dollars under your kid’s pillow for their lost tooth. Cash is still alive and well, and no pandemic can take it down. Like it or not, there are plenty of people who like and rely on using cash bills. And as long as those people are around, no, we won’t be moving to a cashless society anytime soon.

Cash Is Still King

Yeah, you read that right. Dave Ramsey has always stood by using cash, and that will never change. When you buy something with cash, you really feel it. You have to give up something (like that $20 bill) to get the thing you want to buy (like that brand spanking new T-shirt). There’s internal friction there as you watch the money leave your hands and disappear into the cashier’s drawer.

Think about how much big businesses would love for us all to go cashless, though. It’s easier to spend more when you just swipe a card, isn’t it? And people who use things like mobile wallets just swipe away like they’re playing around with virtual Monopoly money. So, of course these big companies would jump at the chance to get us all to stop using cash for good! It’s more kickback in their pocket—a lot more if you use a credit card. Still, nothing beats cold, hard cash. In fact, 85% of business owners say they will always accept cash.5 Take that, cashless society.

If you don’t feel comfortable using cash these days because of germs, that’s okay. Just use your debit card (like you probably were already doing). And don’t feel like you’re contributing to the “downfall of America” by not using cash. Seriously. As long as you have money in the bank, using your debit card is okay.

At the end of the day, whatever kind of payment you want to use (debit, mobile wallet, cash), just make sure you’ve budgeted for it first. You need to plan for every expense whether you’re laying down a few George Washingtons at the gas station or paying back your friend for covering lunch.

Our free budgeting tool, EveryDollar, makes it easy to plan and keep track of all the money you have coming in and going out. And if you want to dive into some fancy features like connecting it to your bank account to track purchases (so easy!) and getting insights on your spending habits, then try out a free trial of Ramsey+. These tools will empower you and take care of all the guesswork. And remember: Staying on top of the money in your own life is the best way to stick it to this cashless society business.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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