Recently I went an entire week without taking any money out of the bank. Every single one of my purchases was done online, via digital transfers using my bank’s app, or with my bank card in stores.
There are definite advantages to living this way, the most important being my ability to track my spending. For example, my bank’s app has a ‘summary’ function that looks at my purchases and sorts them by type of company, dividing them up into categories and months. It then tells me what it thinks I will spend this month and how much left I have in my budget.
Back in the late 90s when I was saving for a house, my budgeting was based on putting specific amounts of money into envelopes labeled with categories. When the envelope was empty, I couldn’t spend any more in that category.
Things have changed a little bit since, then, haven’t they?
Here in Spain, paying by cell phone is becoming more and more popular — you just position your phone near the store’s terminal and a wallet app opens, allowing you to confirm the payment. Again, each transaction is then automatically recorded, so you can later review what you spend and where.
Is there a downside to all of this?
That depends on what you think about personal privacy and data mining. For example, each time I purchase an ebook on Amazon or a flight via an online operator, my Facebook feed fills up with ads for similar books and vacations. It’s a bit disconcerting to think that companies track my spending and use it to advertise to me, but for me, it’s a small price to pay for the convenience.
If I were still running my own business, I’d be thrilled with the detailed tracking of my expenses. Instead of hours of input into whatever financial program I was using, I could simply open up an app and see exactly what I’ve spent and where. If I had separate bank accounts for personal and business spending, I wouldn’t even need a financial program anymore, as it would be all there for me to see and consult whenever I (or my accountant) needed to.
What do you think? How much actual cash do you spend these days? Is the digitization of money a good thing? Will paper money disappear at some point?