If you're shopping away on Black Friday and Cyber Monday, it would be a good guess that you'll pay for most of the purchases with a credit card. The usual psychology of paying with a credit card is that people may pay less attention to prices when paying by credit than when they are paying by cash. Furthermore, we are less likely to remember and keep track of amounts we spend when paying with a credit card than when we pay for things with cash.
Photo by Roger Price
Benefits of cash purchases
If you took on an experiment to pay for everything with cash for a week, it will be easy to experience the difference it makes. We tend to weigh the necessity of a purchase much more with cash than when we pay with credit. And if you start this simple experiment now in the thick of holiday spending, it can force you to rethink your holiday shopping strategy! It must be something about parting with dollar bills that makes spending more painful than swiping a credit card! Don't you agree?
Making a list and keeping it simple
If you haven't quite started on holiday shopping (or even if you have), remember that gifting beyond the necessary during the holiday season is not worth the added debt and stress. Be very cautious and logical with gift giving and stay very much within your means. A recently publicized book called Shiny Objects: Why We Spend Money We Don't Have in Search of Happiness We Can't Buy explores how we have become a nation of materialism and bad spending habits.
Paying for holiday purchases
A survey conducted by the National Retail Foundation demonstrates that holiday shoppers intend to buy with cash this year and cut credit card buying by 10.2 percent from last year. It's too soon to know what actually happens but the truth is that spending cash for gifts does result in spending less. If you didn't budget for the holidays in advance, think of doing so next year. You could budget for holiday season by loading a decided amount on to your prepaid debit card each month. By the time the holidays arrive, you can enjoy the financial freedom you created by using your prepaid debit card for holiday purchases and not worrying about creating further debt!