Younger Generations Prefer to Pay With Cash
A recent report by Credit Karma, the digital personal finance and credit service found that there has been a rise in “cash stuffing” by Generation Z. The study surveyed more than 2,000 adults in the U.S. and found that 69 percent of Generation Z is using cash now versus just 12 months ago.
Despite the new innovations that have emerged for contactless pay, especially during the pandemic and with the recent rise in inflation, cash has become king.
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“It’s no secret that Gen Z has developed somewhat of a reputation as the nostalgic generation, taking fashion cues from the ’90s and Y2K and turning in their smartphones for ‘dumb phones,’” said Courtney Alev, consumer financial advocate at Credit Karma. “It’s no surprise they would bring back cash, too — and it could prove to be a good thing for their bank accounts. We’re seeing a trend on social media where people credit cash stuffing as a helpful way to reign in their spending.”
The concept of cash stuffing is not a new one, but it has gone viral through TikTok trends. It essentially is putting cash into envelopes that are labeled for a person’s monthly budget for categories including rent, groceries, gas, health insurance and more.
The psychological idea is that people will spend less when they have to use physical cash instead of swiping on credit cards. It has recently become a huge budgeting tactic for younger people trying to save more and economically expense out their lives. A third of young Americans said they use cash stuffing as a way to budget.
As for what this means for retail? Alev said cash will not be going out of style fully. “Cash stuffing — and the act of carrying and paying with cash — doesn’t seem to be going anywhere anytime soon, and retailers shouldn’t count out cash just yet,” she told WWD. “Even though there’s been a sharp rise in contactless payments, which have streamlined the purchase process, cash will never be replaced entirely, and retailers should plan accordingly.”
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