This Group Put Away Credit, Debit Cards, Went Cash-Only!

When You Put Your Cards Away and Go Cash Only

•  3 minute read

The Oberlin College challenge: Use only cash for a week—credit and debit cards are banned.

What happens when you ask college students to hide their debit and credit cards and go cash only?

After making them keep track of all of their expenditures for a week, I do just that. Based on their first week’s spending, my students take cash from an ATM that must last them an entire week. No cheating! They then ask a number of questions about their experience.

What was my motivation for making the students go through this?

Before the days of ATMs and debit cards, this was how you managed your financial life. It was all in cash (which you got by going to the bank and cashing a check). Ah, the good old days

To this day, if I face a financial rough patch, my cards go into a drawer (except one for emergencies) and I go all cash.  It certainly eliminates my impulse purchases!

I believe that there is something to the kinesthetic experience of touching the cash. It always helps to see how much you have left to spend.

What was my motivation for making the students go through this? Before the days of ATMs and debit cards, this was how you managed your financial life — all in cash (which you got by going to the bank and cashing a check!)I worry that part of the reason the younger generation is clueless about money is that, apart from a childhood allowance, they never see it or touch it!  Everything is purchased with a swipe! And income, even from babysitting, can be paid electronically!

Eyes Wide Open

I’ve been running this experiment for the last 18 months with students between ages 18 and 22 at Oberlin College, a private liberal arts college in Ohio.

When I first explain the experiment, it slowly registers across the room what I am asking them to give up. The typical reaction is one of mild shock. Eyes open wide, jaws drop.

I think the hardest thing for the students is when they realize they can’t order anything online for a week either!

I do allow a few exceptions to the all-cash rule, like rent, textbooks, and medical emergencies.

The Responses

While I did not track the statistics, I can attest that the majority of these students recorded that using cash felt very different. What’s more, the majority of them spent less than usual, which is exactly what I expected. They were forced to make spending choices they had never face before.

Here are a few of the responses to the question, “Was the purchase experience different with cash? Did your spending behavior change?”

lendkey-female

“I tended to take longer at the register to put away change and gather the correct amount of money,” Celia reported. “My spending behavior changed for the better when I used cash. I was able to physically see how much I was spending versus mindlessly swiping a debit card,” she said.

“I would normally use my debit card, so it was significant actually physically watching my money disappearing,”  Rachel said, adding that it was “interesting how technology/’e-money’ can skew that … I just ate out much less/made time to make coffee at home.”

“Physically handling the money and handing it in for payment felt quite good, actually – even relieving,” Cesar recalled.

“Having already budgeted for the week’s expenses, I didn’t need to worry about where my bank account would be by the end of the week’s expenditures. I already knew where it would be once I made my initial withdrawal of the week’s cash,” he said

And a few had a quite different response:

“With just a card, I always feel like I have very little money left to spend,” Michael said. “Carrying cash actually made me more confident, despite the steep drop in spending for the second week,” he added.

According to Lily, “cash definitely alters my spending habits.”

“When I have cash I see money as more available and it makes me spend more freely.  However, it also is a visual reminder of how much you are spending,” she said.

Lillian, who dipped into her (expected) extra tip money midweek, said, “While I spent more when using cash, I was much more aware of how much was going out of my pocket. So my behavior didn’t change … but I was much more aware of my choices.”