Wednesday, October 20, 2010

Spending cash to save money??

Can cash make me skinnier? And, more importantly, can spending cash save me money?

A recent study has shown a link between using credit or debit cards for supermarket shopping trips and buying unhealthy impulse items. The study found that people who pay by cash for their groceries were less likely to purchase unhealthy impulse products than those paying by credit or debit cards.

The study suggested that the 'pain' of handing over cash for these types of products outweighs the 'benefit' that people perceive that they would receive from purchasing (and consuming) them. Paying on a card however dulled down this 'pain' such that the 'benefit' of purchasing the product relatively outweighed the pain.

This study was picked up by a few online news sites yesterday ( The articles suggested that I could lose weight if I used cash for my grocery shopping.

In spite of yesterday's blog (questioning whether I should get a gym membership), it wasn' t the weight loss component of this article that interested me, but rather the question - could spending cash save me money?

The way I saw it, having a fixed amount that I could spend (and the relative 'pain' of handing over the cash) might stop the overspend that appears to happen when I walk into a super market.

In my ponderings, I realised that the vast majority of my family's grocery shopping was actually done by my wonderful wife, Anna. So, I sent the article to her. Just a little nudge, suggesting that she try using cash rather than card when shopping.

Anna's reply was timely and succinct. She suggested that, while this technique would save her money at the supermarket, it would cost her money everywhere else she goes. In her view, having cash made her spend more money. And, I'm inclined to agree with her, given my experiences.

Anna's hypothesis was that she generally won't put anything less than $10 on a card. While she acknowledged that there are a large number of shops that have a $10 minimum purchase for card transactions, this wasn't the reason. Rather, it was that she felt embarrassed making small purchases on a card.

What does this mean? If Anna is walking past a cafe and gets mesmerised by the smell of coffee, she will buy a coffee if she has cash on her, but will keep walking if she only has her card. the same guys for a cheeky chocolate bar, bag of chips, magazine... the list of potential impulse buys is endless.

This aligns perfectly with my experience. If I start the work week with no cash in my wallet, I can regularly get to Friday without spending a cent. However, if there is cash my wallet, I appear to haemorrhage it all over the place. The amount I can spend seems limitless.

What does this mean? While using cash at a supermarket may reduce the number of impulse purchases you make at the supermarket, it could actually increase the number of impulse purchases you make elsewhere. And, all other things being equal, there's a good chance that impulse purchases would be cheaper at the supermarket than at smaller stores.

But, does this mean that I have to plan my impulse buys?

Are you allowed to do that?

Maybe I'll just suggest that we use cash at the supermarket, and then hide the residual cash under the bed until the next week's shopping trip.

If nothing else, I'll try these tips for cheaper grocery shopping:

  • Take a list - people who shop with a list tend to spend less.
  • Use unit pricing to compare value for money, as buying in bulk is not necessarily always the cheapest option.
  • Shop alone - people who shop as a couple tend to put more in their trolley.
  • Avoid big supermarkets if you just want to pick up a few things - you're better off in a small store.
  • Don't shop when you're hungry - it's a sure-fire way to end up with a trolley full of unnecessary purchases.

No comments:

Post a Comment