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Comment by electroly | Hacker News Reader

IMO, that's outdated advice from the days before online automatic bookkeeping, before credit card transactions were immediately visible online, before your bank could auto-classify your credit card purchases into spending categories, before configurable spending alerts, before budgeting apps with bank integration, etc.

If you spend cash, you don't benefit from any of that and as soon as you forget about the transaction, it's like it never happened. Nothing will be able to help you retrospectively see where your cash is going. You can lie to yourself about it. Charges on a card statement don't lie.

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It's not. The point of cash is to make you more psychologically aware of what you're spending so that you're less likely to buy something you don't need in the first place.

All of the online transaction tracking only helps with purchases that you've already made, so you can say "maybe I shouldn't have done that"...after the fact.

Cash based budgeting works beautifully, but it requires a change from what you're used to and there are certainly trade offs. If you're looking to save money though, cash budgeting is like magic.

It comes down to how you budget and pay your bills. If you take out large chunks of cash at a time then psychologically seeing the cash leave your wallet might personally help you if you treat budgeting as a once a month task. It's easy to get into trouble with a credit card if you never look at your transactions until the end of the month and treat the amount on your statement as a big blob you just have to pay while just glancing through your statement.

If you actually use budgeting tools like YNAB which get you into the habit of spending a couple minutes every morning to confirm and categorize where your money went you end up with all the psychological benefits of cash, it's impossible to forget a transaction, you know exactly where your money went for years, and you end up with even more money due to the credit card rewards. I also usually take that time every morning to pay or partially pay on all my cards to make it even more obvious the cash that is leaving my checking account each day.

If you pay with cash then once your wallet is empty you’re done. I could spend far more on my credit cards than I actually have if I wanted to.

If you do then you can enjoy yourself the night, and limit your purchases for the rest of month.

You also would have more money in your account if you had been getting the credit card rewards for years and could extend your night without spending more than you have.

I'm sure it does work for some people, but the popularity and success of budgeting apps suggests that it's not for everyone. The tradeoffs you mention are all of the accountability features I mentioned. The article is reporting on research that suggests that unaccountable cash spending is a problem for many people.

It really depends on the person. I found that budgeting apps with bank integrations were quick and convenience, but I wound up in the trap of only doing the most superficial analysis. ("Yep, sure did spend that much.") For myself, manually logging purchases is far more effective. It's a similar observation as I had in college, where I found that hand-writing my notes helped me learn better than typing them.

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