When it comes to managing your money, the consensus is that it’s very easy to overspend when making “contactless” payments.
It is thought that simply touching a card is not the same as handing over real money.
It has long been thought that if you want to control your waste, you should stick to cash.
But a new study by researchers at the Bank of England suggests that contactless technology may be better for budgeting after all. It’s an idea that many of us will find counterintuitive.
The new theory is that people find it easier to track contactless spending because each purchase is recorded in their banking app.
Theory: A new study by Bank of England researchers suggests contactless technology may be better for budgeting after all
In fact, economists found that many people now consider everything they buy with cash to be “free.”
This is due to the belief that they spent the money when they took it out of the ATM and not when they used it to purchase an item.
This fallacy, researchers say, is an example of “feminine mathematics.” It’s an ironic phenomenon on the social media site TikTok, where people (not just young women) come up with elaborate justifications for extravagant purchases.
Female mathematicians are the subject of much ridicule, but the report suggests that devotees might be right.
The opposite approach is old-school ‘cash stuffing’, where people put real bills in envelopes or jars and use them for specific purposes, such as paying utility bills.
Four in ten adults surveyed last year believed contactless payment was the best way to manage their money, compared to a quarter who favored using cash.
The study was published on the Bank Underground blog, written by Old Lady economists, but is not an official publication.
He said apps that could analyze people’s money habits are a powerful budgeting tool.
The report said: “After all, for some of us, nothing makes you realize you’re overspending like knowing you’re in the top 5 per cent of your bank’s customers in terms of spending on Pret.”
