Facing a cost of living squeeze, people in the UK are increasingly returning to cash as a more effective way of managing their budgets and controlling spending.
In total, over £3.3 billion in cash was deposited and withdrawn over Post Office counters, the first time figures have crossed the £3.3 billion threshold in Post Office’s 360-year history.
Personal cash withdrawals were up almost 8% month-on-month (£744 million, June 2022) and up over 20% year-on-year (£665 million, July 2022).
Post Office has attributed the record amount for personal cash withdrawals at its 11,500 branches to more Brits choosing to have staycations in the UK as well as people increasingly turning to cash to manage their budget on a week-by-week basis and often on a day-by-day basis.
Research published by the University of Cologne and the Alpen-Adria-Universität Klagenfur in 2018 found that individuals who pay by card have a less accurate recall of the amount paid than individuals who settle their bill with cash. The study concluded that this recall accuracy effect typically led to overspending as “a precise recollection of past spending has an effect on the willingness to spend money in the future.”
The trait appeared particularly entrenched in multifunctional cards that incorporate non-payment functions such as bonus programmes and ID, and more so for smartphones and wearables.
Further, people who use PFM tools on smartphones to track their spending and manage their budgets are equally more likely to rack up debts and make poor financial decisions, according to a study conducted by Global Financial Literacy Excellence Center at the George Washington School of Business. The research found that one-quarter of people who use their phones to track spending reported overdrawing their accounts, compared with 20% of those who didn’t use their phones.
Martin Kearsley, banking director at Post Office, says: “Our latest figures clearly show that Britain is anything but a cashless society. We’re seeing more and more people increasingly reliant on cash as the tried and tested way to manage a budget. Whether that’s for a staycation in the UK or if it’s to help prepare for financial pressures expected in the autumn, cash access in every community is critical. Postmasters handling over £3.3 billion in a single month demonstrates just how vital being able to deposit and withdraw cash, securely and conveniently, is for millions of people.”