When I graduated high school in 2007, Australians were using cash on 70 per cent of all their transactions.
Fifteen years later, in 2022, cash transactions had dropped to just 13 per cent, according to the Reserve Bank of Australia (RBA).
Truth of the matter is, that you’re more likely to see a McDonalds than an ATM these days – there are just 5,500 ATM’s in use in Australia compared with 12,800 in 2017.
Debit cards, credit cards, tap-and-go technology, buy-now-pay-later and the emergence of digital wallets have each contributed to the demise of cash as tender in Australia.
My personal preference is internet banking and a debit card for essential spending (groceries, electricity, mortgage, internet etc) and cash for discretionary spending (eating out, clothes purchase etc).
I found it almost impossible to live within my means when I used tap and go on discretionary spending. I had no idea how much I’d spent and what I’d spent it on.
I’ve had more feedback on this Bulletproof tip than any other since I released my book, Bulletproof Investing.
Many point to the fact there are now budgeting tools within most banking apps, and some have separate bank accounts and cards with weekly allowances on them.
My CommBank app allows me to do this, but I’ve found it too big of a job to categorise all the expenses when I have a perfectly well-functioning system by using cash.
Having said that, all the budgeting tools achieve the same purpose in the end – capping our spending and living within our means.
The core principle of financial independence is exactly that – living within our means. There is nothing to invest if we spend everything we earn.
Living within our means, to me, means saving at least 10 per cent of what we earn and living off the rest.
Where most of us fail to abide by this principle is when it comes to discretionary spending – things we want but don’t necessarily need.
That’s not to say we must live like martyrs or to make light of the fact that hard decisions must be made from time to time, especially when it comes to things we genuinely need.
I also understand that for some it’s harder to say no to our kids than ourselves.
It is simply human nature in a world of clever marketing and savvy influencers to fall into the trap of thinking we need something when it’s in fact just something we want and think we deserve.
As you might suspect, young people are the biggest cohort to have adopted digital spending, with 63 per cent of Australians aged between 18 and 29 using digital wallets compared with just 9 per cent of Aussies over the age of 65.
It can’t be a coincidence that the statistics around money anxiety in younger Australians has spiked since 2007 when I was younger, and cash was the mainstay of spending habits.
Let me ask you this … do you feel like you live within your means? Is there someone you care for who may not be?
If you’re not, or they’re not, it’s time to do something about it. That could be embracing cash again or setting up a digital structure that achieves the same thing: controlling where the money goes!
Above all, be a role model for those around you.
Postscript…
Interestingly, there is a set of data that suggests cash might still be king after all.
Think about the fact – we have never used less cash and yet there has never been more banknotes in circulation in Australia than right now.
There are 916 million $50 notes in circulation (34 for every person) and 483 million $100 notes (18 for each person).
In other words, $3,500 for every man, woman and child in Australia.
I don’t imagine many Australians could say they have that sort of cash floating around the house.
So, shouldn’t we be asking who has all the cash?
Well, the RBA estimates that somewhere between 55 per cent and 80 per cent of cash in circulation is hoarded by Australians for a rainy day.
That means there’s a lot of cash sitting under Grandma’s mattress!
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