Paying with cash versus credit


As parents, we want what’s best for our children now and in their future. We strive to teach them right from wrong, to encourage them to live upright and moral lives, and to plan well for their futures. We want them to avoid repeating the mistakes we’ve made in our past. One of the greatest financial mistakes that many parents in our generation have made is relying heavily on credit instead of cash.

According to the Federal Reserve's April 2013 G-19 Consumer Credit Report, Americans owe a hefty $850.9 billion in credit card debt, or $ 6,890 per household. If we are going to raise money-smart kids, we need to teach them the potential perils of relying on credit cards, and explain to them (and even model) the benefits of using cash. Here are some great reasons to choose cash over credit.

  1. You can’t spend cash you don’t have. Unlike credit cards, it’s virtually impossible to go into debt if you are only paying for things with cash.
  2. You are more easily tempted to spend more when you pay with a credit card than with cash. Most people struggle with controlling their spending on credit. Using cash forces you to carefully evaluate your purchases and helps you stick to a budget.
  3. There’s always the potential for fees such as interest, late fees, etc. with credit cards. Many banks and credit unions offer no-fee checking and savings accounts, so there are generally no fees provided you keep track of your cash withdrawals, and don’t overdraw your account.
  4. It’s easy to be enticed by special credit card offers and rewards. While rewards are nice, you may find over time they aren’t really that valuable especially if the end result is that you’re carrying a balance on your credit card and paying interest.
  5. If you prefer to track your purchases using a credit card versus cash consider only using a debit card so you’ll be spending money you have versus money you don’t have. Like your credit cards, you can also get an itemized list of your debit card spending. The data can be downloaded into and tracked with Quicken or numerous other free online budgeting applications. Debit cards can give you all the conveniences of credit cards, while avoiding credit card debt. The key is to keep on top of your statement and always know how much you have in the bank.

Are you looking for a simple system to organize your money, track your cash, and make wise spending decisions? The envelope system is down right the simplest budgeting approach around. All you need to get started are some envelopes, a pen or pencil, and a copy of your budget. There are also a number of free applications that allow you to do it online such as

Some people do quite well managing their credit card spending but if you are wanting to teach your children to be money-smart and responsible consumers, teach them the value of spending with cash only. provides a fun and educational way for children, with the help of their parents, to manage money and build financial literacy. With FamilyMint’s intuitive award-winning online money management application, the envelope system is built right in and kids learn about tracking their money, goal setting, and forming the types of financial habits and behaviors that will lead to financial success for a lifetime.