Cash or digital? The surprising generational divide

• Gen Zers prefer cash for budgeting purposes.
• Cash is better suited for tipping.
• The fondness for cash comes just as many businesses shift to cashless payments.

Is cash about to make a comeback?

Some pundits have said that physical cash could become history within three years due to the popularity of digital payments. But a surprising number of Americans are keeping cash around because they don’t want to rely only on plastic or Venmo — and it helps them budget their money.

In fact, fifty-one percent of Americans said they use physical cash to budget their money, and Gen Z prefers this form of currency over other payments more than any other generation (52%), according to a new survey.

Cash is here to stay

Cash Connect, an ATM management company, conducted research with OnePoll to find that cash isn’t going away despite what the naysayers predict.

In fact, 61% of all participants said they use cash as a budgeting tool to manage how much they spend — with Baby Boomers using it most often (65%).

The survey, which polled 1,500 Americans to analyze their payment methods, found that cash remains popular despite the pandemic accelerating the shift to digital payments. It was anticipated that the risk of COVID contamination would push businesses to go cashless as consumers demanded contactless payment — and cash’s popularity has plummeted over the years.

Cash stashes remain popular

While 77% of respondents said there’s nothing worse than finding out they need cash when they don’t have it, secret money hiding spaces remain a staple for Americans.

The survey found that the average American keeps $89 in their emergency stash — with one in five respondents hiding upwards of $200.

While nearly a third said they hide money in a spare purse or wallet, old-fashioned hiding spots like under the mattress or in books on a bookshelf remain popular. Some even opt to hide money in old prescription bottles, according to the survey.

Cash is still best for tipping

Whether it’s going to a restaurant or paying room service at a hotel, cash is still being used to tip.

Forty-eight percent of respondents said they use only this type of payment for tips, which was the most popular reason for having it on hand. Over a third of respondents said they withdraw cash for tipping specifically, even if they don’t pay for their service this way.

However, cold hard money remains quite popular for on-the-go services. It’s used often for fast food and candy and snacks, according to the survey. Thirty-two percent of respondents said they use it to pay for their coffee, and more than a quarter (27%) said they pay for gas this way.

But there’s a line where consumers stop spending it — $31 is the amount where respondents said they prefer to use a different payment method for their purchase.

“There’s this perception that cash is disappearing, and it is not,” John Clatworthy, SVP, Director of Client Services of Cash Connect, said in a statement. “What we are seeing is that consumers still see cash playing an important role in how they manage their money and make payments.”

Perhaps it’s time to tell Sweden to pump the breaks on going cashless by 2023.