Forget cash stuffing! Bank of England says contactless cards are best for budgeting

By John-Paul Ford Rojas

21:51 09 March 2024, updated 09:20 10 March 2024




When it comes to managing your money, the received wisdom is that it's much easier to overspend by making 'contactless' payments.

The idea is that simply tapping a card doesn't feel like handing over actual money.

It has long been thought that if you want to curb your wasteful spending, you should stick to hard cash.

But a new study from Bank of England researchers suggests that contactless budgeting may be for the best. This is an idea that will seem counterintuitive to many of us.

The new theory is that people find it easier to keep track of contactless spending because every purchase is recorded on their banking app.

Indeed, economists have found that many people now consider anything they buy with cash to be 'free'.

This is due to the assumption that they spent the money when they took it out of the cash machine, not when they used it to buy an item.

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Researchers say this misconception is an example of 'girl math'.

It's a strange phenomenon on the social media site TikTok, where people — not just young women — come up with elaborate justifications for extravagant purchases.

Girl math is widely mocked, but reports show that devotees can do something.

The opposite approach is old-school 'cash-stuffing' where people put actual bank notes into envelopes or jars and use them for specific purposes such as paying utility bills.

Four in ten adults surveyed last year believed contactless payments were the best way to manage their money, while a quarter supported the use of cash.

The study was published on the Bank Underground blog, which is written by economists at the Old Lady, but is not an official publication.

It says apps that can analyze people's money habits are a powerful budgeting tool.

The report says: 'After all, for some of us, nothing makes you realize you're spending more than learning you're in the top 5 percent of your bank's customers in terms of pre-spending. Is one of the.

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