Save Money By Carrying Cash In Large Denominations
Wed May 20, 2009, 5:27 am | Leave Comment
As the Mexican folk saying goes: “You should take care of small, loose bills as large bills take care of themselves.” According to a new study to be published in the Journal of Consumer Research, shoppers are less likely to spend their dough if they are carrying cash in large denominations. This so-called denomination effect can be a powerful predictor of consumer spending habits and behavior.
The study shows that if people have an equivalent amount of money, say $100, the folks with a Ben Franklin in their pockets might not part with it easily, while those carrying Andrew Jackson and George Washington more easily give up the cash. Another big advantage with $100 bills is, you will less likely catch swine flue than if you have to deal with, let’s say, 100 $1 bills.
Joydeep Srivastava, the co-author of the study, gives the following rational of such consumer behavior and spending habits:
- Each $20 is a separate, less valuable entity than that single $100 bill. So it’s easier to part with five of those twenties than with a single precious hundred in our pockets.
- Consumers fear that once they break that large bill, they won’t be able to stop spending the rest. Once that barrier is passed, it’s like a dam gets broken.
- Since shoppers with bigger bills are less likely to make purchases, frugal consumers can carry hundreds as a form of self-control.
Moral of the Story
From a recession-fighting perspective, however, self-control is Satan. The U.S. government is desperate for consumers to start spending again. So maybe the Obama Administration is approaching the economic stimulus the wrong way. Forget about tax cuts and grants to state governments. Just give people a bunch of $1 bills.
Now if I could just get my hands on Ben Franklin – urrh – a $100 bill.
What do you think?
Related Posts On Doable Finance dot Com
- Tips To Save Money In 2009 And Beyond
- Tips To Save Money While Spending
- 5 Big Tips To Save Money On Auto Insurance
- You Can Use Cash, Credit And Now Cell Phone
- Make The Most From The Money You Already Earn
Click on the left to read more similar articles.
