In a world of cards, digital wallets and instant payments, some people still become uncomfortable leaving home without a substantial amount of cash. Their wallet may contain far more money than they are likely to spend that day, and even when every shop accepts digital payments, they prefer knowing physical money is available. It is tempting to label this old-fashioned behavior, but psychology and behavioral economics suggest several deeper possibilities. Keeping cash close can interact with perceived control, mental accounting, loss aversion, payment salience and the “pain of paying.”
Cash is tangible: you can see it, count it and immediately know how much remains. That physical quality can change how money is psychologically experienced. Research spanning more than 40 years suggests payment method can even influence spending behavior.
