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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 noticed that more and more businesses are only accepting plastic or digital payments. 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 currency 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 a society where all physical money (cash, checks and coins) is completely and totally replaced by digital currency—and that includes replacing debit and credit cards too.

You might be thinking, Wait . . . don’t we already have a cashless society now? And you’re not really wrong either. Cash is still king, but because of the convenience factor, a lot of people choose to make their everyday purchases using PayPal, Venmo, Zelle, Apple Pay, debit and even the one that should 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?

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Pew Research shows that in a typical week, 29% of Americans make absolutely zero purchases using cash.1 That’s not all that surprising though. It 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 . . . after COVID-19 came on the scene, people didn’t want to touch anything that someone else touched (without it being sanitized first). And what’s one of the grimiest, most 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 currency 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 cut back on 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 dollar bills were always gross—even before the pandemic ever came along. But that didn’t seem to bother anyone back then. Strange . . .

Does This Have Something to Do With the Coin Shortage?

You’ve probably heard all about the great American coin shortage that happened after the pandemic. If you lump the phrases “cashless society” and “coin shortage” together, then yeah, you might find a conspiracy theory somewhere in there 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. The coin “shortage” happened 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 came from coins not moving around out there in the wild of the economy and not from a true shortage of the coins themselves.2

Add all those things up and they equal one big circulation problem. That’s all, folks. 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.

What Is Fedcoin?

Fedcoin is a term people throw around when talking about a type of federal digital currency (aka a federal kind of cryptocurrency) that’s backed by a central bank. But let’s be clear, Fedcoin doesn’t exist—yet.

Fedcoin would be on the blockchain just like any other cryptocurrency, but it would have the central bank in its corner, which is something traditional cryptocurrency runs away from. In fact, most people who are knee-deep in crypto are drawn to it because it’s not regulated by a central bank. No word on what Fedcoin would think about that irony.

So, what’s the backstory to all of this? Well, the government has been scrambling to come up with a good response to the mining and investing boom of cryptocurrencies like Bitcoin, Ethereum and Dogecoin (yep, that’s the one named after a dog meme). Then, in March 2022, President Biden signed an executive order announcing that the government would look into the potential of a U.S. Central Bank Digital Currency.3 That’s a fancy way of saying a digital dollar could be coming down the pike.

Did the COVID-19 Pandemic Lead to a Cashless Society?

Nope. We might use less cash, but our society still has a long way to go before it’s 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 (when it’s still “real” digital currency). 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’ll always accept cash.4 Take that, cashless society.

And look, don’t feel like you’re causing 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 spotting you at lunch.

Our free budgeting tool, EveryDollar, makes it easy to plan and keep track of all the money (yep, even the digital currency kind) you have coming in and going out. This awesome tool 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. Learn More.

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