Why Cash Is Essential for Australians and Our Small Businesses

In the discussions I often find myself within, I notice many of my friends (other small business owners plus online keyboard jockeys) are debating the importance of cash and why it should remain.

Having cash on hand is crucial for Australians, whether for personal use or running a business. Without enough cash, you could face financial problems, even risking bankruptcy and losing what you’ve worked hard for.

Here’s why I believe cash is still very crucial for business and personal use:

Budgeting Control: Cash provides a tangible limit on spending. When you have a set amount in your wallet, it’s easier to track and control your expenses compared to using a credit card where the spending limit might encourage overspending.
Avoiding Debt: Using cash eliminates the risk of accumulating debt. With credit cards, it’s easy to fall into the trap of spending more than you can afford and then facing high-interest charges if you don’t pay the balance in full each month.
Privacy and Security: Cash transactions are generally more private as they don’t leave a digital trail that could be accessed or tracked by third parties. This can help protect your financial privacy and reduce the risk of identity theft.
No Fees: Cash transactions typically don’t involve any additional fees or charges, unlike credit cards that may come with annual fees, interest charges, foreign transaction fees, and other costs.
Accepted Everywhere: Cash is universally accepted, so you don’t have to worry about whether a merchant accepts your specific credit card or if there are any technical issues with card processing systems.
Avoiding Impulse Purchases: When you pay with cash, you feel the physical loss of money, which can make you more conscious of your spending decisions and less likely to make impulse purchases compared to the convenience of swiping a card.

On the issue of impulse purchases, here are three more reasons why cash is preferred for personal and leisure reasons:

Privacy in Personal Expenses: Using cash for personal expenses related to hobbies or leisure activities like pub raffles, bingo nights, or late-night purchases at the local OTR can offer increased privacy. Since these transactions don’t leave a digital trail, they remain confidential, preserving your personal choices and habits.
Limiting Family Spending: Cash can be useful for managing family spending, as it provides a tangible limit that everyone can see and understand. For instance, giving a set amount of cash to children for extracurricular activities or entertainment helps teach budgeting and financial responsibility.
Avoiding Overspending on Impulse Buys: When it comes to hobbies or leisure activities, using cash can help avoid overspending on impulse buys. With cash, you’re limited to what’s physically available, making you more mindful of your spending and less likely to make spur-of-the-moment purchases that might be regretted later.

Basically, cash in our hand provides better budgeting control, helps avoid debt accumulation and fees associated with credit cards, offers privacy and security benefits, is universally accepted, and whilst it can curb impulse purchases compared to credit cards, is also allows more freedom to buy stuff without having to ask yourself if you have sufficient funds.

Seeing that cash in you hand helps you remember what and how hard you had to work to attain it – and hopefully stop you from spending it like it grows on a tree!

Those are my thoughts on the matter. If you have any thoughts on the matter, feel free to leave a comment below.