Cash still has fans

Americans appear to be of two minds when it comes to how they spend money. While digital payments continue to gain steam, a notable share of folks still like the feel and use of cash. Close to two in five (38 percent) of those surveyed said cash feels more "real" than digital money, according to a new study by Empower, a financial planning and investment firm based in Colorado. Yet, in practice one in five said they use cash only a few times a year; just 18 percent use it daily.

The popularity of cash may be a product of economic uncertainty, as a quarter of those surveyed said cash can serve as a "safety net" in times of economic downturns, with 20 percent revealing they had increased their cash holdings over the past year due to market uncertainty.

About 40 percent of the just over 1,000 Americans surveyed last August by Empower said they feel safer keeping cash on hand in case of emergencies or tech outages.

Twenty-one percent said they use cash for privacy in an AI-driven, digital world. Twenty-four percent said they rely on cash to limit their spending. Further evidencing this reasoning, a third of those surveyed said they are more likely to make impulse purchases with digital payments and that they spend more without the natural guardrail of cash.

Tips and cash discounts

The average person holds between $51 and $100 in their physical wallet, the Empower study found. Gen X is the outlier, averaging between $101 and $200 in cash holdings. So how do Americans use cash? The top reasons (cited by 48 percent) for holding cash is for tipping and getting discounts for paying with cash (34 percent).

Additional reasons given for carrying cash include:

• Paying small businesses that don't accept cards
• For splitting restaurant tabs when dining out with friends
• Paying for parking meters and tolls
• Paying for gas

Piggy banks to digital wallets

For many people, cash is tied to their earliest memories of money, Empower researchers noted. Forty-one percent said their first financial experiences involved physical cash, not digital payments. Nearly a third (32 percent) said they understood the value of cash at an early age, and learned to save by setting aside dollar bills before they ever used a bank account.

"Yet, today, money etiquette is changing," Empower wrote. Many younger Americans have skipped using physical cash entirely, going straight to digital money, the firm found. Overall, 37 percent said each generation relies less on cash than the preceding generation. Better than a fifth (22 percent) said their own children will grow up with little or no cash experience.

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