Despite being born surrounded by technology, a report by Credit Karma revealed that among young people of Generation Z, the use of cash as a regular payment method is becoming more popular every day.
Nearly a quarter (23%) of those born between 1997 and 2012 pay with cash for most purchases. This figure represents an increase from 69% of young people who said they "use more cash now compared to 12 months ago."
The increase in the use of cash in this age group is higher than that of Generation X (47%) - born between 1965 and 1980 - and even exceeds that of the Boomers (37%), born between 1946 and 1964.
Young people spend less money using cash
64% of Generation Z said they prefer to use cash to pay for their purchases, as they spend less money. Young people use cash mainly to purchase food (50%), clothing (46%), non-essential items (40%) and take-out food (40%).
Factors driving higher cash usage in the past year include "feeling more in control of spending when using cash (18%) and being more careful with spending when paying for purchases with cash (19%)."
However, one in five young people (20%) claimed to use cash more often "because paying with cash feels like free money because there is no digital trail of the transaction."
Cash Stuffing
Last year, the method became fashionable among the younger generation. Cash Stuffing, a savings tactic that went viral on TikTok, consists of storing cash in various containers for different expenses. The purpose of this method (also known as the envelope method) is that when the money runs out, there is no more budget for that category of purchases (so less money is spent).
Cash Stuffing is used by 30% of Generation Z youth. Of these, 55% said they do it to save money. Of these, 89% reported positive results. Another 70% reported having reduced their monthly spending. Courtney Alev, a consumer financial advocate at Credit Karma, stated:
Cash can be a great tool for budgeting and saving money, especially if you're someone who tends to overspend when using debit or credit (...) It's no secret that Generation Z has developed something of a reputation as the nostalgic generation, taking fashion cues from the '90s and Y2K and turning their smartphones into 'dumb phones.'
