Forget Mobile Payments, Here's Why Cash is Still King

It's starting to feel anachronistic to whip out old-fashioned greenbacks to make a payment, these days. If you're used to using a debit or credit card almost exclusively, it may seem almost quaint to make purchases with paper and metal, especially when in some places you can just wave your phone to accomplish the same thing.

Cash is the vinyl of payments. While record albums lack Spotify's ease of use, there's something so retro about them that they're cool. But you don't have to be a hipster to appreciate the benefits of analog currency. Get in the habit of using cash, and you're bound to waste less money and even stick to a budget.

That's why many financial gurus recommend using cash to rein in your spending. Dave Ramsey, for instance, advocates putting your monthly spending allotments in envelopes, the way your grandmother did. Doing so makes intuitive sense, even though there's no logical reason why you can't do the same thing electronically. As Ramsey notes, "there's something psychological about spending cash that hurts more than swiping a piece of plastic."

In addition to that psychological safeguard, I've discovered a few more reasons why it's good to adopt to a cash system:

• If you're dining out and have to split the check, it's easier to do so with cash than fiddling with credit cards.

• Marketers and possibly the government can't track your spending habits.

• If there's a situation like a blackout, ATMs don't work, so it's nice to have some cash on hand.

• Many places don't take credit cards or don't take them for charges under $10; this is especially true if you travel outside of metro areas.

• If you've budgeted correctly, you can avoid ATM fees.

On the other hand, I've only discovered two pitfalls of going all-cash:

• You can get mugged or lose your wallet, and that money is most likely gone forever.

• Change. You'll find that your pockets are constantly rattling with change. It's also a bummer to make a purchase for, say, $2.09 and have to carry around that 81 cents, which has a tendency to fall out of your pockets.

There's no upside to being mugged, but I've found that there is a positive aspect to change. If you empty your pockets at the end of the day, pretty soon you'll have a jar that's worth $50 or so. That's found money.

On balance, however, carrying change around is a drag. But so is looking at your bank statement at the end of the month, and finding that you've been frittering away your income with small purchases. (By the way, when I advocate going "all cash," I'm not referring to recurring monthly charges. I don't see a reason to pay my phone bill with cash or a check if I can do so with a keystroke.)

Ramsey's right. For whatever reason, using plastic is such a painless experience that it lulls you into a state in which you feel there are no consequences for your wanton spending. If you spend $70 on a shirt with your debit card, you can rationalize that you really need it, and it's not that much money. Lay down three twenties and a ten, though, and it's like donating an organ.

At least for me. Maybe cash isn't for everyone, but I've found that it's the monetary equivalent of wearing tight clothes when you're on a diet — a constant reminder of your natural limitations. To continue the metaphor, a mobile-payment system such as Google Wallet is akin to processed food: It seems harmless and convenient, but rely on it long enough, and pretty soon you'll find you're in much worse shape than you ought to be.

Image: Getty/Chung Sung-Jun