Save Money By Carrying Cash In Large Denominations

Wednesday, December 12, 2012, 2:00 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 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.

Money is money. Whether it’s larger denomination bill or smaller, it seems that human psychology plays a big part when they spend.

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 Thomas Jefferson or Abraham Lincoln or 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.

Denominations at $100 bill or less

To refresh your mind, presently the following denominations exist at or below $100:

  1. $100 Bill

    Obverse: Benjamin Franklin
    Reverse: Independence Hall

  2. $50 Bill

    Obverse: Ulysses S. Grant
    Reverse: U.S. Capitol

  3. $20 Bill

    Obverse: Andrew Jackson
    Reverse: White House

  4. $10 Bill

    Obverse: Alexander Hamilton
    Reverse: U.S. Treasury

  5. $5 Bill

    Obverse: Abraham Lincoln
    Reverse: Lincoln Memorial

  6. $2 Bill

    Obverse: Thomas Jefferson
    Reverse: Declaration of Independence

  7. $1 Bill

    Obverse: George Washington
    Reverse: Great Seal of the United States

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.

In a Nutshell
From a recession-fighting perspective, however, self-control is Satan. The U.S. government is always desperate for consumers to start spending.

Forget about tax cuts and grants to state governments. Just give people a bunch of $100 bills so they can refrain from excessive spending and start saving money.

Now if I could just get my hands on Ben Franklin – urrh – a $100 bill.

New $100 Note Production Video

The sound after three-quarter of the video when the bills are being printed is exhilarating – causing great emotional or mental stimulation.

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