Can a ‘cash diet’ help you spend less?

Reporter: Andryanna Sheppard
Published: Updated:
Credit: WINK News.

For the first time in United States history, credit card debt has topped one trillion dollars. Online lending marketplace and business website LendingTree found the average American opens their first credit card at the age of 20. The average Floridian has a balance of more than $8,500. Now, some experts are recommending ‘cash diets’ to help people get out of the red.

paying with cash

When it’s time to make a purchase, do you reach for paper or plastic?

“Plastic. I never carry cash. I do tend to find myself swiping a lot,” one shopper said.

“It’s a lot more beneficial to use credit cards cause then you’re not actually using your money. You’re using your bank’s money,” another shopper added.

One banking study shows the average American carries $67 on them, but still uses plastic one out of four times when buying something under $25. With the ease of digital wallets, it’s getting easier and easier to go cashless and harder and harder to control our spending. A recent study published in Frontiers in Psychology found that people derive pleasure from purchasing items with their phones, possibly because they associate positive experiences with using other apps on their devices.

How to try a ‘cash diet’

According to the Federal Reserve of Boston, the average value of a cash transaction is $22 compared to the average value of a credit card transaction at $57. If you want to reset your finances, some experts recommend a cash diet. The idea is that using only cash for a set amount of time can help you be more mindful of what you spend. Several studies have shown consumers feel more pain when paying cash than credit.

To try a cash diet, first decide how long you plan on going all cash – whether it’s a week, a month, or longer. Experts also suggest coming up with a budget and dividing your cash into envelopes for spending with categories like groceries, gas, dinners, and miscellaneous items. At the end of your trial period, compare your spending to what it was with credit cards and decide if paying by cash can really help you save.

cash diet tips

Paying off credit card debt has been even harder over the last year. The Federal Reserve has raised interest rates 11 times to help get inflation down. The Board will announce if it will raise rates again at its next meeting in November.

Copyright ©2024 Fort Myers Broadcasting. All rights reserved.

This material may not be published, broadcast, rewritten, or redistributed without prior written consent.