Using less credit and more cash hasn’t affected blogger Kate Sitarz’ standard of living. Here’s why she’s a fan of going on a mostly-cash diet.

Germany has one of the most cash-centric economies in the world: Nearly 80 percent of all payments are done in cash, with the average person carrying around €120. And when I moved here about a year ago, I immediately noticed something.

I wasn’t spending as much.

Prior to moving, I spent around $1,500 a month using credit. I used my two cards freely in the States, primarily for convenience. I rarely carried cash because it wasn’t necessary. Besides, all the money was eventually coming from the same place. A $5 coffee? Sure, put it on the card.

After a few months overseas, I noticed my statements were hovering around a few hundred dollars, mostly from booking airline tickets. At first it seemed like a fluke. I was saving more money than ever, even though I was increasing my use of cash. But 12 months later, I’ve realized the savings are sustainable—so long as I keep using cash.

Frequent ATM trips are annoying

I don’t like carrying a lot of cash. And because the thought of having more than €100 on me at any given moment terrifies me, it means I have to make more frequent visits to the ATM if I want to spend money.

The thing is, sometimes finding an ATM is annoying. I also prefer ones that allow me to choose my bill combinations (for example, I can take out €100 as one €50, one €20, two €10s, and two €5s). This blend of laziness and pickiness makes me question how bad I really need to spend money.

Spending physical money hurts

Beyond a couple of grocery stores I know accept credit cards, I’m paying in cash for nearly everything. Each time I go to the ATM, watch the bills come out, and then part with those bills at a restaurant or store, I get a tactile reminder of just how much I’m spending. This feeling is something I don’t get when I use a debit or credit card; those numbers in my online banking account don’t have a physical presence.

Want something? Not so fast…

There are relatively few things any of us need. When I look at my credit card statements from last year, they’re filled with wants: some new clothes, a hotel stay, and tons of restaurant charges.

Using cash, I initially thought about everything twice as long. Now, it’s a quick, “Do I need this?” Usually, the answer is no, diminishing impulse buys and forcing me to really think about price tags. I may have once easily purchased a nice pair of shoes for $120 on my card. I now find myself analyzing not whether I can afford it—I’ve always had the mindset of “don’t buy it on credit unless you have the cash to cover it”—but whether it’s worth it.

This is also effective for small (maybe mindless) purchases that add up, like coffee. Instead, I think about potential emergencies where I’ll need cash (gas, pharmacy, parking) and the embarrassment I’ve felt walking through a checkout line with not so much as a coin in my purse.

Cash can be secure

For me, carrying cash doesn’t make me feel safe, since it makes me feel like I have a hey-I-have-money target on my back. However, Germans see the security behind cash transactions differently.

A recent proposal to ban cash payments above €5,000 was met with resistance because detractors believe cash is safer. They see electronic payments as an intrusion of privacy, and a means for the government to tap into their personal data. After all, no one wants their government to know they went to the grocery store only to buy a pack of condoms and a few pints of ice cream.

Savings become second nature

As The Atlantic recently reported, 47 percent of respondents to a recent Federal Reserve Board survey said they would need to borrow or sell something to come up with $400 in an emergency. Cutting spending, when and where possible, inevitably helps save more. And knowing I have a rainy-day fund gives me extra peace of mind. Carrying debt isn’t even an option, since everything is paid for instantly.

A year later, using less credit and more cash hasn’t affected my standard of living. Sure, I buy fewer clothes, eat out less, and only purchase the groceries I need for the day or two ahead. But the money I do spend is done so more thoughtfully than in my past.

What has been affected is my tolerance for loss. In behavioral economics, loss aversion is summed up in the phrase “losses loom larger than gains.” And boy is that true with cash.

Kate Sitarz is a freelance writer living in Germany. Her work has been featured on Yahoo Travel!, The Huffington Post, and USAToday, among other outlets.

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