Gen Z is paying and saving as if they aren’t in the current inflation-stricken economy. From the COVID-19 challenging financial situation and being raised with high food and gas costs, saving money and controlling finances is a concern for this younger generation.

Also, learning from the huge debts of their parents and grandparents, Gen Z won’t make the same mistake. Therefore, they are looking for ways to spend less on purchases and save. Interestingly, using cash is the method of choice for this up-and-coming demographic.

Cash usage declined due to competition from cards and other digital payment methods. The pandemic was also a major blow as misinformation was put out by the main street media that the virus could spread through paper currency, moving many Americans to online shopping and reducing cash usage. Yet, Gen Z’s love of cash couldn't break, with many saying they prefer cash for daily transactions since it helps them stay out of debt and take control of their finances.

Moreover, 37% of their payments are cash compared to 22% of Gen X and Millennials. A TikTok challenge with youths breaking Hennessy bottles to access their bills broke the internet, proving the effectiveness of cash usage among Gen Z.

Yet, despite the misinformation that paper money and coins could spread COVID, cash usage rose from 19% to 20% in 2021. That was the first increase since the Federal Reserve Diary of Consumer Payment Choice did its first research in 2016.

What’s Triggering Cash Use Among Gen Z?

In contrast to the general trend, a large fraction of Generation Z use cash. Arguments claim they are too young to use credit cards. Others claim they are concerned about taking on debt or may even believe it’s a great way to curb unnecessary spending.

So, what can American’s learn from Gen Z’s love of cash as we face record high-inflation?

• Cash provides bargaining power: Discounts offered by small businesses are the biggest reasons Gen Z uses cash. Why? More and more merchants are using ‘Cash Discounting Programs,’ which impose fees on consumers who pay with a card. And with cash, consumers are likely to stay within their budget.

• Avoid debt by using cash: With American debts soaring above $800 million, Gen Z consumers have learned from their parents and grandparents the bitter consequences of racking up debt through credit card usage. Gen Z has found a way to counter that risk - by using cash. They acknowledge that cash is tangible and easier to track and keeps them from overspending.

• Cash makes budgeting easier: For many younger consumers, using cash helps them stay on budget. That became clear when the #CashStuffing hashtag went viral on TikTok. Through this online challenge, Gen Z is showing the world how they use cash to make reasonable purchases that keep them within their budget. Rather simple and old fashioned, cash stuffing is simple. At the beginning of each month, you allocate a certain amounts for purchases in respective envelopes such as groceries, utilities and lunch. This allows consumers to track how they spend and when they are run out of cash in each respective envelope, they stop spending. It’s also easy to set aside an envelope for savings!

Without a doubt cash is a terrific way to ensure you don’t overspend, stay out of debt and control impulse buying. 

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