If you know anything about the food scene in midtown Toronto, you know about Albert’s Real Jamaican Foods. Their fall-off-the-bone chicken roti and oxtail curry are a thing of local lore around St. Clair Ave. and Bathurst.
A few weeks ago, I found myself at their takeout register, desperately clawing the depths of my purse to find extra coins for pineapple upside-down cake. That’s on top of a steaming bag of roti I had secured with a $20 bill withdrawn just for the occasion.
See, what every faithful customer knows is that Albert’s only accepts cash. And despite fumbling through my purse in front of a lineup of customers, I didn’t secure the treat.
Initial frustration aside, I had saved roughly $5 by not getting that cake. Though the savings were modest, it got me thinking: How much can I save when my credit card can’t come to my rescue?
Cash-only budgets have been touted as a saving grace against impulse spending for decades. But they’ve lost much of their zeal in a digitally-driven world. In fact, a recent report from Dalhousie University predicts that 26 per cent of Canadian grocery stores won’t accept cash in the next five years. And yet, many young people are going against the grain for the sake of savings.
“It’s helped me pay off about $25,000 in debt,” says Vancouver-based Sasha Gray, whose TikTok channel touts the benefits of cash-based budgeting and teaches viewers how to “cash stuff” – divide earnings into labelled envelopes allocated to different spending goals. Her profile has amassed nearly 200,000 followers.
“Every single pay period I work out a budget – I pay all my main bills online, then I put cash towards sinking funds and savings challenges,” says Ms. Gray.
Her budgeting technique is no fad. “Cash makes us spend a lot more mindfully,” says Christine White, a financial adviser at Money Coaches Canada. “There’s a sense of loss – a visual and mental connection that’s missing when tapping a card.”
As someone who doesn’t remember life without Apple Pay, a cash-only budget in 2023 seemed to me both intriguing and impossible. So, I decided to try it out for myself.
After taking stock of my budget on the Mint app and sizing up my savings, I headed to my local bank to withdraw roughly $150 for the week.
My budget covered discretionary purchases such as coffee pods, movie tickets (it was Barbenheimer weekend after all) and my obsession with Shin Ramyun noodles. It also included non-discretionary purchases such as subway fare and prescription refills.
What it didn’t include was my share of rent or Netflix subscription, which are automated payments pulled from my account on a monthly basis.
On Day 1, I left my credit card at home and began my foray into a cash-only world. Almost immediately I met my first obstacle when refilling my subway pass. The machine had no interest in my creased $20 bill and the card terminal had activated my Apple Pay.
Much fumbling later, I convinced the machine to take my $20 and proceeded to Google “How to disable Apple Pay,” cutting off all ties to digital money short of tossing my phone out.
The next few days proved just how much I was hard-wired to rely on impulsive digital spending. All my intentional budgeting seemed to fly out the window when I was lured to the sale section of my local Longo’s.
Grocery shopping began to take ages – I was doing mental math inside each aisle, Googling alternatives to pricier ingredients (no, applesauce is not a substitute for eggs in cake batter, no matter what Reddit says).
By Day 4, I felt acutely aware of how quickly the money was disappearing. Counterintuitively, my wallet got heavier as coins replaced larger bills. I had roughly $60 left.
I became obsessed with making the money stretch – taking a 15-minute detour to go to a cheaper pharmacy sprinting through uptown errands to make the two-hour transit deadline for a free transfer home.
When I was tempted by an Americano at Pilot Coffee, I was thankful when they said, “We don’t take cash.”
By the end of the week, I had come incredibly close to dodging my Visa. Until I realized I hadn’t bought those movie tickets after all. Not only did I not have enough cash left, but waiting to pay at the theatre would risk decent seats.
“Cash-only budgeting may be useful for decisions about important expenses, but there are many inconveniences involved: It’s time-consuming, risky and cash may not be accepted everywhere,” says Nikola Gradojevic, professor of finance at the University of Guelph.
But as much as I’d love an excuse for my failed experiment, my misstep had little to do with the lack of cash itself. At the root of cash budgets is the simple idea of setting physical barriers between yourself and unnecessary spending. And these days, cash isn’t the only way to do that.
“Say you want to stick to a cash budget, but this week, you use $500 on your Visa – just transfer that to your chequing account and create that credit for the following period,” says Janet Gray, a certified financial planner with Advice Only Planners.
Banks like Tangerine and BMO even offer subaccounts for different spending categories and let you tie these to savings goals. “So, rather than calling it a cash-only strategy, call it a ‘no-credit’ strategy,” says Ms. Gray.
If you do want the psychological barrier of cash budgeting, ”do cash for certain categories of life, like groceries or specific errands,” says Ms. White, the financial adviser. “This makes the money really feel finite,” which, in fact, is the reality that digital spending can disguise.
In the end, I caved at the thought of another week hearing about Cillian Murphy’s “otherworldly performance” without seeing it with my own two eyes. I bought the tickets online.
PERSONAL FINANCE COLUMNIST
The Globe and Mail, August 15, 2023