How to manage our money in a "cash-less society"

04 April, 2019Lucy Hargrave

We asked students to show off their journalistic skills and financial know-how by writing a 800-1,000 word blog or article. The 16-17 age category had to answer to the following question:

Discuss the advantages and disadvantages of a “cash-less society” in terms of how we manage our money.

The entries were short-listed by our panel of experts, before being reviewed by journalist Iona Bain who determined the winners.The winner for this age category is Lucy Hargrave, from Benenden School, Benenden, Kent.

Here’s what Iona had to say about Lucy's entry:

“Wow: this is an outstanding entry. It’s informative, full of insight, entertaining and highly original – what more could you want? It’s well-written and flows amazingly well with enough interesting external references to make it substantial but not too many to weigh it down. This writer knows exactly what it takes to make finance interesting, relevant and personable. A talent to watch!”

Lucy Hargrave’s entry

“As a wide-eyed teenager on the verge of leaving school, dreams of traveling, owning a house and gaining new independence are all slowly getting closer, my reality is now how am I going to pay for such a life? Money makes the world go around. That new phone you got for Christmas, the milkshake you drank yesterday, it all costs money.

I’m sure many will agree with me that feeling of elation when you find a few spare coins you’d forgotten at the bottom of your piggy bank makes you love having cash, however with the improving standards of online banking and nearly 7/10 people now banking online according to the ONS, there must also be many benefits of online credit. Unity. A ‘cash-less society’ would allow money to be all in one place. No loose change lying around uncounted, it would all be easily recorded and checked just by looking online. This would encourage people to plan how to spend their money, as everything is displayed for you. New apps such as HSBC’s ‘Connected’ let people display all their money from all their bank accounts all on one page. Helping people organise their money so they can work out where their income is going and how they could reduce expenditure if needed (helping the many students out there yet to realise where all their money is going to when they keep on buying that extra drink when they’ve got £2 spare in their purse!).

However, no cash can equal excessive spending! Seeing just a number can cause some people to overestimate the amount of money they have as they can’t visualise the amount and over-spend. Contactless payment not helping the situation because of its ease of use, a simple tap meaning people ‘buy without using their brain’. Planning spending goes down the drain with contactless as people don’t see the coins in their purse suddenly disappearing. Contactless payments in 2017 amounted to about a third of all card purchases according to the Guardian and in a ‘cash-less society’ this would change to all purchases being card payments, becoming dangerous for those that like their small luxury’s.

Sweden is already close to being a ‘cash-less society’ and the idea for an electronic format ‘e-krona’ instead of their currency ‘krona’ is being investigated by the Swedish central bank. Although this may work in the future, the Swedish central bank has warned that this may lead to households having little opportunity to save and pay with risk-free central bank money, which would affect how they manage their money for the worse.

In contrast, having no loose change may be a blessing in disguise for many.  Those quick morning lattes or snatched impulse buys would become more obvious as they would be recorded on your bank balance. Even the process of using your card more often instead of just handing over some coins may reduce what some people spend, as it takes time mentally to verify how much you want to pay and will make some people think more about where they spend their money.

On the other hand, credit/ debit cards are mainly used by adults. A society with no cash could pose a problem to young teenagers and kids trying to use their own money. Its easy for parents to give their children a quick few pounds for an ice cream when they walk into town or as pocket money for them to store in their piggy bank. Without cash this would be much harder, involving bank transfers and kids having their own cards from a young age. Tangible money helps children young or older to learn its value and feel as if what they are buying is theirs. Reports have already made concerns of the worries of children having debit cards, The Telegraph saying, ‘the launch of a debit card for children as young of eight could be a ‘slippery slope to young people becoming hooded on credit’, showing the worries a ‘cash-less society’ may lead to.  Children trying to work out how much money they have would involve them learning to use online banking much earlier and may cause young kids to over-spend as they don’t understand how much they can spend.

But with the constant technological advancements developing further than the minds of you and I can imagine, there could be new inventions which make it easy for kids to manage their money. For example, kid’s in Sweden area said to be using smartphone payment system ‘Swish’ which makes it easy for them to transfer money between friends. These kinds of simple programs could make them more aware of the value of money and make them manage their money better than how we did when we were younger. The tracking and recording that comes alongside digital payment would allow children to realise and be reminded where all their ‘pocket money’ is going and would also help parents examine and analyse their kids’ money when they come to them with sob stories of no funds!

With the improving future of technology and the boundaries of contactless payment expanding, the idea of society operating in a cash-less world is not out of the question. I think this would provide people with exact information on what and where they are spending their money and allow people to manage their money more effectively. However, with the dangers of irresponsible spending we may just want to hold onto our hard copies for a while longer.”

Find out more about our Young Financial Journalist competition