Gen Z shunning digital payments for cash to understand emotional cost of spending
Money makes the world go round, but will it always exist as a physical entity?
UK consumers are at the forefront of adopting digital financial services and are outpacing the US for the adoption of contactless payments. But amongst young people a growing trend is emerging of utilising cash.
In November 2024, the UK Treasury Committee launched an inquiry to investigate whether new rules are needed to make cash acceptance mandatory across Britain.
However, Emma Reynolds, the new economic secretary to the Treasury, said that the UK will not become cash free - but neither will shops and service firms be compelled to accept cash payment from customers. There is no guarantee that cash will remain a viable payment option.
It’s long been understood that cash usage can provide a vital lifeline to groups such as those with long term poor health, the elderly or people at risk of economic abuse.
However new research from LINK, the UK’s cash access and ATM network, indicates that surprisingly the youngest in society are most at risk of financial exclusion, as the use of physical money declines. Those aged between 18 - 24 struggle the most with tasks such as online banking; and according to Business Insider’s 2024 Future of Cash survey, 70 per cent of Gen Z are against a cashless society, due to concerns surrounding privacy, security and inclusivity.
Dr Jashim Khan, Associate Professor of Marketing at the University of Surrey’s International Institute, has been researching this phenomenon.
He argues that during the coronavirus pandemic, cash came to be seen as contaminated and dirty due to fears that it could carry and spread the Covid virus. But now, in an era where digital currencies are flourishing globally, the physicality of cash and coin is exactly what appeals to those aged under 30. His latest research reveals that despite being the first “digitally native” generation, Gen Z are drawn to this tactile experience because it fosters a sense of psychological ownership, which guards against overspending in a cost of living crisis.
He says: “Many Gen Z view cash as a more effective tool for budgeting and controlling expenses. Its tangible nature enables them to visualize their finances, helping to prevent overspending, especially when they have limited income or are facing financial uncertainty.
“Additionally, this trend is reinforced by concerns about privacy and the desire to minimize the digital footprint associated with card and contactless transactions.”
Likewise, TikToker Beth Tydeman, a UK cash stuffer and budgeter, believes that as the generations have changed, so has our use of money. “Money has become less tangible,” she says. “It gets paid into our account and can almost feel unreal for us. This is why so many people struggle to manage their finances."
Beth began cash stuffing in January 2023, and credits the method with transforming her financial life. Her TikTok account @BudgetsWithBeth has more than 120,000 followers, with her most popular cash-stuffing tutorial videos accruing more than one million views.
Some have questioned why she does not simply store her money in a high interest savings account, but she insists this method never worked for her.
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She explains: “I love knowing where every penny of my income is going. I have been able to build up savings for things I had never been able to before. My emergency fund is healthy, and I am able to buy things guilt free, knowing I already have the money available. I have gained a huge amount of financial security from cash stuffing, knowing that if an unexpected bill arises, I have the funds to pay for it.”
Yet, there have still been challenges. She says: “More and more banks are closing, which makes accessing your money in cash more difficult. I am fortunate that my local bank branch is still active, but for many this isn’t the case. ATMs have limits on withdrawals, which again makes accessing your money more difficult. There is also the battle of some places being cashless. To ensure I am not stuck in a situation of being in a card only facility, I keep a buffer in my account to cover essential card spending.”
She adds: “I regularly have followers get in touch to tell me about their financial success – saving for house deposits, taking their children on their first ever holiday, getting out of debt and not using credit cards to buy Christmas presents – all because of the cash stuffing and budgeting method.”
“For the Gen Zs among us, regaining some financial control is essential. We are facing rising costs in almost all areas and our incomes are stretched. A method like cash stuffing helps people to understand their money better.”
Whilst the choice of payments lies with individuals, Dr Khan thinks we need to understand how different methods affect us, not just financially, but emotionally. He thinks cashless apps and ATMs should incorporate graphics and sounds that represent cash symbols, to mimic the emotional discomfort that can be associated with parting with physical money.
Far from being analogue and antiquated, in an era of financial uncertainty, converting to cash is one of the most effective budgeting tactics. However, over the past three years one in ten ATMS in the UK has closed. In 2023 cash made up 10pc of point of sale transactions, but this is projected to drop to just 6pc by 2027.
Nevertheless, in a world where money is often invisible, the generation most affected by rising costs are finding new ways to access a diminishing financial education and regain control over their money, one payment at a time.
Discover more about cash payments
If you think cash use in the UK should be continued and expanded, you can join the Campaign for Cash here.
About the author: Charlie Duffield is a freelance news, culture and social affairs journalist and audio producer based in London. She has written for Stylist, Prospect, The Independent, Grazia, The i paper, Metro, and others.
At The Lead we bring you a long-read feature every Tuesday and Thursday direct to your inbox, sometimes we’re exposing how the household benefit cap is trapping children in poverty or reporting from the frontline of the far-right rising and swelling populism ahead of the German elections. It’s progressive politics, about people, place and policy, with insightful and considered writing. You can support us to go beyond the mainstream headlines by taking a subscription and meaning we can bring you more writing by Charlie and others.
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