Do You Just Love Your Cash?

 by Karen Karsten
money handsWhen you are out shopping and go to pay for your items, do you immediately pay cash or pay with a credit card? This may seem like a silly question, but there is psychological evidence that suggests many individuals become emotionally attached to their cash. One study has even shown that just touching money relieves pain. and feelings of social alienation. Interesting, right?
   According to Live Science, “A four-part study found what many financial planners already knew: People spend more money when using credit cards compared to cash purchases. People also spend less when they look at their expenses in detail, the researchers found.”
Before we pass on the actual results of a study that was performed by New York University and was written in the Journal of Experimental Psychology’s September issue, let’s explore for a moment the psychology of money.
   Here is an example: a woman told about using cash versus credit cards. “After my doctor’s appointment, I took my prescriptions to my pharmacist. Instead of waiting there, I decided to buy some birthday cards at a nearby card store. The total cost of cards and gifts came to around $57.00. I did have the cash, but instead I decided to pay with a credit card. I could say that I was holding onto the cash to pay for the prescriptions, but when I went to pick them up – I used my credit card again.”
According to the Journal of Experimental Psychology, “Consumers simply feel the pain of paying more when they part with cash.” The following studies are anecdotal evidence of this cash versus credit card phenomenon:
   In one study, 114 participants estimated how much they would spend using cash versus using credit for a well-described restaurant meal. “People are willing to spend (or pay) more when they use a credit card than when using cash,” the authors wrote.
Then 28 participants were given a detailed shopping list to work with. In a questionnaire format, they spent more when they used a $50 gift certificate instead of $50 cash.
   Finally, 130 participants were given $1 cash or a $1 gift certificate to buy candy. At first, they were more willing to spend the gift certificate than the cash. But after holding the gift certificate in their wallets for an hour, they became less likely to spend it, indicating that the certificates came to seem more like real money.
   These studies suggest that “less transparent payment forms (like as credit cards) tend to be treated like (play) money and are hence more easily spent (or parted with),” the researchers argue.
This fascinating study suggests that we are more emotionally attached to our cash when given the choice of paying with cash or with a credit card. Perhaps it is the burden of not knowing what will happen with the economy.
  So where do you fit in here? Do you love your cash too much to spend it and instead slap down the credit card, keeping your greenbacks safe in your pocket or purse? Some Chicks have tried the “money diet.” After the bills are paid, the cash that’s left is what they live on for the month. Could you do that?  Do tell!
About Karen

Karen Karsten, CPCC, CAC, has had several business careers, in government, finance, retail and publishing. Each career was a building block that helped her create the life she has now as a coach, writer and executive director of Rich Chicks and Creative Principle of Think You Can LLC.

Her companies, Think You Can ( and Rich Chicks ( both explore the magic of prosperity and creating clarity about life values. Karen has total faith in the magic of belief. Notice how that works either way: belief of magic, magic of belief. Magic is there—in you, too. Take a moment right now and honor the magic in you.


  1. And don’t forget… using debit and credit cards forces fees onto small and large business owners alike. When you use cash, you are keeping your dollars local by their very nature.

    Tips to servers should always be made in cash so that business owners don’t have to pay fees on the tips you give. The average fee for a sale in the US for a debit/credit card is 2%, but can be as high as 5 and 6% for American Express! Imagine how quickly this becomes thousands for the business. If you are tipping 15% with a debit card, consider adding another dollar to make up for the cost of the transaction… some restaurants actually pass this fee along to their servers!

    If you are in the habit of gaining miles from your American Express or other card transactions, consider that the businesses you patronize are directly funding your trips, not your “purchases”.

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