Cash seems to be heading the way of the Tasmanian Tiger. As payments increasingly go digital, we’re using less of the folding stuff. And that’s a shame because cash can play a valuable role in money management.
Gone are the days when cash was our go-to choice for paying for purchases.
Reserve Bank of Australia1 data shows only around 13% of payments were made using cash in 2022 – and that was half the share reported in 2019.
These days, we’re using debit and credit cards for the bulk of payments.
Not everyone is happy about it.
In June, two independent Federal MPs introduced a private member’s bill aimed at preserving the role of cash.
Part of the driver, according to Katter, is that "With cash, we control it; we control how we spend it and save it.”
He has a point.
A vast body of research confirms that when we pay with cash we typically spend less.
Paying with cash hurts.
One study from 2024 notes that, “Over 40 years of research links cashless payment methods to increased consumer spending”2.
The reason is simple. It hurts to hand over cash.
In fact, Canadian research3 used MRI scans to show that paying by cash activates the parts of our brain linked to psychological discomfort.
When we pay by card, there simply isn’t the same link to a drop in our bank balance. So, we are likely to spend more.
If you’re not convinced, try it for yourself.
Withdraw $100 from an ATM machine and see how it feels to hand over the notes at a check out compared to reaching for a card to tap-and-go.
What does all this mean for Defence Bank members?
If you’re on a tight budget or saving for a personal goal, cash can play a key role.
Try this strategy for example.
Start by using Defence Bank’s Budget Planner to work out how much you can afford to spend each week on regular expenses plus treats. The amount you come up with is your weekly allowance.
Next, withdraw your weekly allowance from an ATM.
From here you can spend the cash on whatever you choose. But you need to aim to restrict yourself to spending no more than the cash you’ve withdrawn.
The remainder of your money can be transferred to one of Defence Bank’s high interest savings accounts to help you reach your goals sooner.
Defence Bank is making it easier to access cash.
Defence Bank's recent partnership with atmx is part of our commitment to making it easy for members to get their hands on cash – as well as benefiting from fee-free cash withdrawals at ATMs overseas (great if you’re on deployment).
Moreover, our Everyday Access account offers unlimited transactions with no ongoing fees, ensuring members have the flexibility they need.
To find out more about how we can help you make the most of cash to achieve your budgeting goals, reach out to our Contact Centre on 1800 033 139 or visit your local branch to find out more.
1. https://www.rba.gov.au/publications/bulletin/2023/jun/consumer-payment-behaviour-in-australia.html
2. https://www.sciencedirect.com/science/article/pii/S0022435924000216#bib0104
3. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2901808
Important note: This information is of a general nature and is not intended to be relied on by you as advice in any particular matter. You should contact us at Defence Bank to discuss how this information may apply to your circumstances.
