Report reveals changing attitudes towards cash, with Gen Z viewing cash payments as ‘free money’

We all know that great feeling of finding a crisp five pound note stashed down the back of the sofa or in an old pair of jeans that you’d completely forgotten about. But, a recent survey conducted by Little Loans has revealed that exactly how you feel about cash can say a lot about your age.

Following a trend on Twitter that saw 18-24 year old’s describe cash as ‘free money’, we commissioned a survey of 2,000 participants to discover how different age groups feel about cash payments vs card payments - and the results highlight a stark comparison between the age groups.

Physical cash payments feel like ‘free money’ to Gen-Z

Generation Z (18-24 year olds) think paying with physical cash feels like ‘free money’ compared to card transactions, according to the survey respondents.

When financial experts asked individuals about the reason behind this answer, Gen Z participants revealed that paying with cash feels ‘free’ because the physical cash payment doesn’t affect their online bank balance. So, because there is no digital trace of the spending and the cash payment hasn’t been recorded in their online bank balance or factored into their digital budget, the transaction essentially feels ‘free’.

This sentiment is also reflected by some Twitter users.

As Generation Z has grown up in the digital age and have likely experienced online banking and mobile banking through the majority of their financial experiences, it is fitting that they feel like cash payments are less real payments and are essentially ‘free’ money. However, with this attitude towards cash comes a risk of overspending and not having full visibility over all your money.

Little Loans savings tip: if you feel as though cash is ‘free’ money, then make sure you pay the cash into your bank account so that you have full visibility over your spending. Many modern banking apps like Starling and Monzo allow you to pay money in at Post Offices and the money is credited to your account within minutes.

Physical cash payments feel “more real” to ages 26-65

Whilst 18-24s consider physical cash transactions to be ‘free money’ because there is no digital trace of the spend, older generations consider paying with physical cash to be more “real” than a card or digital transaction due to a physical exchange of money.

When individual survey respondents were asked to explain further, older generations revealed that the physical act of handing over money makes a transaction feel more “real”.

This attitude towards cash was reflected by the majority of the British population, with just 18-24s claiming that cash payments feel free.

Little Loans savings tip: those who feel like cash payments are more ‘real’ than online or card spending may have struggled with budgeting during the pandemic, when many retailers and outlets switched to card payments online to avoid the transmission of germs through handling cash.

If it is the act of physically handing over cash that helps to remind you of your spending and keep you on top of your budget, then consider using a budgeting app like Snoop to send yourself reminders on what you’re spending. These apps will send you notifications every time you spend, which can serve as a reminder that you are spending real money, and will also allow you to set budgets for each element of your life, such as takeaways and rent, so you can see the impact of your spending in real time.

1 in 3 people in Wales think paying with cash feels like a ‘free’ transaction

Interestingly, whilst the majority of the UK agreed with the sentiment that paying with cash feels ‘more real’ due to the physical exchange of money, 1 in 3 residents in Wales agree with the statement that paying with cash feels free. This was a considerably higher percentage than the rest of the UK.

Attitudes towards card payments and online banking are changing with the new generation

The data reveals a changing attitude towards cash from Gen-Z compared to older generations who have not grown up with digital banking.

The survey results highlight a changing attitude towards physical cash and online banking, according to Little Loans Consumer Finance Expert Paul Wilson.

Commenting on the survey data, Paul said:

“The survey results are a fantastic way to represent the changing attitudes towards cash in an increasingly digital society.”

“The stark contrast between the feelings of Gen-Z and their elders is to be expected, with most Zoomers having access to online banking for their majority of their financial experience.”

“It is the belief of many that card payment can be dangerous for overspending, which is mirrored in the feelings of the older generations. However the data indicates a change in attitude and perhaps younger generations will be more mindful with card payments than with cash spending.”

“According to the data, Zoomers (18-24 year olds) don’t subconsciously consider their cash to be part of their overall finances, which can be dangerous for young people going to uni and not correctly calculating their assets.”