Cash in on smarter spending


By Matt Silich

Living in an age where technology is constantly evolving to make the satisfaction of desires more quickly and easily accessible, it’s becoming increasingly hard to resist overindulging in all the temptations available at college. 

There are countless ways to spend money on the Illinois campus, from the 10 kinds of fast food nearby on Green St. to the dozens of fraternity and sorority fundraising events hosted each week. Linking together many of these temptations is the ability to swipe one’s credit card and immediately receive drinks, food or more expensive items like clothing. 

The easiest solution to avoid waking up and wondering where an entire bank account of money went lies with an old school method of payment: cash. 

In recent weeks, I’ve committed to exclusively using cash for going out at night, to both dinner and the bars, and it’s saved me a significant amount of money. When possible, carrying cash makes one less likely to spend impulsively, allows for easier budgeting over set periods of time and shows spenders exactly how much money they’re giving away.

At its most basic level, the reason carrying cash helps reduce spending is because the amount of money being spent is directly evident to the buyer. With credit cards, one can simply swipe and not consider the consequences until their bill comes at the end of the month. 

College is an especially vulnerable time for excessive spending because many students are becoming financially independent and acquiring their first credit cards.

The idea that cash can help curb one’s spending habits isn’t new. In 2000, two Massachusetts Institute of Technology researchers conducted a study about the willingness of students to spend based on their available currency.  

The researchers offered two randomly selected groups of students the opportunity to make bids on tickets to an important upcoming Boston Celtics game. One group was told they would be allowed to pay exclusively in cash, while the other was told they could only pay with a credit card. 

Each student privately wrote down their bid for the tickets on a piece of paper, handed it in and left. 

After calculating the results, the researchers discovered that students who were told they could pay with credit were willing to bid well over 50 percent more than students who were told they could only pay with cash. 

Spending 50 percent less impulsively every night would make a huge difference for students living on a budget, especially when students often impulsively choose to buy another round of drinks for friends or purchase food they don’t need. 

The easiest way to implement cash-only spending is to budget a certain amount of money for a period of time. In my case, I withdraw a modest amount of money and see how long I can make it last. For others, it could be most effective to withdraw $20 in cash before a weekend and disallow any spending above that limit. 

Each person should plan their withdrawals in a manner that fits their lifestyle best, and it’s much easier to constantly monitor one’s money by checking the account balance after each withdrawal. It’s always wise to be aware of how much disposable income one has, especially with all the other necessary expenses at college (rent, textbooks, Ramen). 

Some students struggle the most with buying drinks for others at bars, and those people would probably benefit most from bringing only a small amount of cash with them when they go out. Others may spend most of their money on luxury items at the grocery store and would benefit by allotting a specific amount of money for each trip.

The idea to withdraw cash more often was originally planted in my head by older fraternity brothers complaining about opening tabs at bars with their credit cards. They would absentmindedly leave the tabs open all night long, resulting in highly excessive amounts of spending. 

Popular campus bars like Red Lion and Joe’s serve hundreds of students on a daily basis; converting to cash-only purchases at these venues would help students avoid getting caught up in the atmosphere and spending heavily.

But still, new services become available each day for students to spend (or potentially waste) money on. Just this week, Uber announced that it will begin service in Champaign-Urbana, and there are popular new apps such as Hooked, which encourage students to go out and spend their money at local restaurants. 

Even with these new spending opportunities, using cash can help remind students whether they’re purchasing a luxury or a necessity. 

Smart budgeting doesn’t mean it’s impossible to go out and have fun, and it doesn’t require students to starve themselves. Taking small steps like relying more on cash can help limit spending without limiting fun.

Matt is a sophomore in DGS. He can be reached at [email protected]