Cash is still king in the United States — but for how much longer?

Why Cash is Still King for Individuals and Businesses

Cash is still king in the United States — but for how much longer?

“Cash is king” for individuals and families. Cash is also king when you run a startup or a small business. It is not just an expression in big business or investment portfolio analysis, it is an expression that reflects hidden blessings that shape your overall financial health.

Regardless of the value of your assets, without adequate amount of liquidity, you may run into many financial problems and may risk bankruptcy, loosing your assets and potential opportunities.

As an old adage, cash is king then and cash is still king now.

When people think of where to put their money, it is very easy to default to investments in stocks, lands, real estate, or retirement accounts.

While these are all good investments and there are many good reasons to invest in them, It is also very important to always consider holding a portion of your financial resources in liquid assets.

Liquid assets are those assets you can easily convert to cash in a very short period of time.

Think of holding some amount of cash in regular checking or savings account, opening a money market fund account, buying short-term certificates of deposit (CDs), municipal notes or Treasury bills.

You can also hold some amount of inventory for liquidity. These assets are easy to access and are not easily prone to market swings or losses.

Whether you earn a 7-figure salary or have billions in business revenues, without adequate liquidity, you can easily fail financially. This is liquidity time, and will always be. Click To Tweet

Keeping these in mind, let’s move on to why cash is still king!

Reasons Why Cash is Still King

Poor cash or lack of liquidity is the main reason many individuals and business struggle financially. Your earnings may be very high and your business model may be superb; however, you may end up spending all of your earnings or tying them up in non-liquid assets. Without positive cash-flow, you may be risking your overall financial health.

Here are reasons why cash is king for individuals and businesses:

1. Increase Your Ability to Make More Money

Opportunities do not send prior notifications. To grow financially, you need to be able to identify and seize opportunities as they come. In the recent Covid-19 crises, many assets became significantly under-priced. Only investors who have cash could take advantage of such opportunity and buy those assets at their very low prices.

When you have cash, you increase your ability to make more. There is money in liquid assets. Cash is still king. Click To Tweet

Cash is king because opportunities can come up at any time and may no longer be available by the time you are done liquidating some of your non-liquid assets. When you have cash, you are able to secure good opportunities as they come and make more money.

2. Meet Emergencies

You need cash to meet those unplanned situations. These include: medical or dental emergencies not covered by your health insurance, damage to car or home not covered by insurance, legal issues, and possible loss of job or pay-cuts.

Just individuals, businesses also have emergencies that may require immediate cash payments. Think of natural disasters, legal issues, system crashes, medical emergencies and extended power outages.

Cash is king when you are able to prepare and meet those emergencies as they come without having to take on debts. Debts not only reduce your net worth, but may also reduce your credit worthiness (a significant part of your financial health) when you take on too much debts.

3. Reduce Risk of Loss

Investments in real estate, stocks, bonds and golds are non-liquid assets and may not be easily accessible when you need immediate cash. This means that before you can use the proceeds from these investments, you will have to sell them first.

Now, think of what happens when you have an immediate need of cash and decide to sell off your investments in any of these non-liquid assets. If these assets are currently trading at a price lower than you paid for them, the moment you sell them off to meet your immediate cash needs, you incur losses on those investments.

With these types of investments, you are at the mercy of the market and because of the volatilities in many markets, these investments are prone to losses. However, while these are good investments (and I recommend you invest in them), they are good for long-term investments only. Cash is king in the short-term so as to reduce your risk of loss.

4. Pay Bills Faster without Debts

You need cash to pay your bill faster either as an individual or as a business. Many people pay their bills late because of lack of cash and some charge their bills to their credit cards.

While it may appear to be convenient or easy to pay your bills using other people’s money, unless you pay these credit card bills off within the same billing cycle, you will be incurring more fees, adding to your losses and jeopardizing your financial health.

Cash is king in not only paying your bills faster, but also in saving on late fees and interest payments, maintaining a strong credit history and improving your overall financial health. Click To Tweet

5. Survive During an Economic Downturn

Cash is king to survive during an economic downturn. Covid-19 is typical example. Many business closed, revenues plummeted, people lost jobs or faced pay-cuts; but the bills kept coming in. As Nathan Verdi wrote, “Cash is king in the time of coronavirus”

Because of the cyclical nature of every economy, there will always be a period when the economy is operating at less than full potential. Such recessionary periods do not necessarily take away your fixed expenditures such as mortgage or rent payments, insurance, loan payments, utility bills and also average groceries (for individuals).

Without adequate cash, businesses may be forced to downsize, shut down operations or possibly risk bankruptcy; and individuals may be forced to take on new debts or loose their investments.

With cash however, you will have more flexibility and be better able to meet your fixed expenses and survive any economic downturn.

Do you think that cash is still king? I’d to know your thoughts on this. Please share in the comment below.

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Cash is no longer king in times of COVID-19

Cash is still king in the United States — but for how much longer?

From a generational perspective, there are some differences, as one would expect. Those over 50 are least ly to now use contactless payment via smartphones (e.g.

Twint, Apple Pay, Samsung Pay, PayPal app) or visit the self-checkout kiosks in the supermarkets with 56% and 44% never using this option respectively.

Under 30s have increased their use of contactless debit card payments (38%), debit card payments (33%), credit card payments (31%) and contactless payment via smartphone (27%).

Whether older generations are reticent to try something new or don’t see the need to adopt new payment methods, with only one per cent paying with smartphones for the first time for example, needs further study.

Of the youngest generation surveyed, seven per cent tried mobile payments for the first time.

It will take more than hygienic reasons to get our seasoned seniors to scan their e-wallets, which is why retailers only benefit from offering a variety of payment methods, both traditional and innovative, to bridge any generational payment preferences.

Necessity is the mother of invention

Whilst no new payment methods have yet emerged from COVID-19, the pandemic has seen consumers forgoing cash in favour of contactless and digital payments.

History bears this out – back in 2003, according to the World Economic Forum (WEF), digital payments and e-commerce launched in China in response to the SARS epidemic to avoid unnecessary human contact, which only grew in its aftermath.

Because much is still unknown about COVID-19, including its lifespan on various surfaces, a number of central banks including China, the US and South Korea have been cleaning banknotes by methods such as ultraviolet light and high temperatures, even going so far as to quarantining banknotes for two weeks before putting them back in circulation.

Moreover, cash may be slowly ending its reign on the global stage in general.

As reported by Forbes, the central banks of both China and France are working on a digital yuan and euro respectively, whilst the US has been discussing a digital dollar for quite some time and Sweden is running an e-krona pilot project until the end of 2020. The momentum is there; payments are becoming more digitalised, not only on a micro level, but also on a macro level.

One thing is certain, the advantages of digital and mobile payments will survive the crisis and we will see an increase of digital payment adopters and converts. Given the challenges facing retailers, providing customers with more options to complete purchases would be in the best interest for businesses.

Getting your e-commerce house in order

“Seamless” is not a fancy buzzword; it is increasingly what customers expect, particularly in the retail space.

COVID-19 has prompted a number of traditional brands and retailers to improve their e-commerce offerings, technology and website user-friendliness to respond to the increase in online shopping. Making customer’s lives easier doesn’t stop at the virtual shopping cart.

Retailers will be more ly to earn customers business, and Francs, by giving them a large variety of payment methods, auto-fill billing and delivery details and one-click purchase at the touch of a fingerprint or with facial recognition.

Cultivating customer goodwill by way of a quick and seamless shopping experience, both in-store and online will pay off in the end in the form of loyalty and repeat purchases.

There is still a long way to go until we have a fully cashless society and too early to say whether the tendency to reach for our credit cards and e-wallets is a fundamental shift or rather borne necessity to limit contact with people and potentially germ-laden money. According to a BBC story, when even our cash loving German neighbours are changing their behaviours in the form of digital or contactless payments, anything is possible.

Keep your card on guard

Although COVID-19 has obliged people to favour cards over cash, it also highlighted our dependence on cash, which is why we’re unly to abandon banknotes anytime soon. Not everyone is comfortable with the idea of a cashless society, particularly the more conservative Swiss.

When it comes to data protection, cash is reliable and unhackable (provided it isn’t counterfeit). The metaphor of keeping cash under the mattress to protect yourself from financial loss is more acute when faced with a crisis and economic uncertainty.

Central banks, governments and ill-intentioned individuals can access digital forms of wealth far easier than the physical kind.

Though we’re unly to face expropriation and taxation at the hands of the government in a financially stable country Switzerland, it can be an attractive concept for more totalitarian regimes who are pressed for funds or indebted to international lenders.

There is genuine concern that electronic payment methods can expose people and their data to fraud or misuse, particularly with payment apps. Phones can be hacked. Apps aren’t 100% secure.

Nefarious groups took advantage of the COVID-19 crisis to step up cyber attacks with more of the population working from home and customers considering unfamiliar e-commerce sites to purchase goods and services.

In April, cyber attacks such as phishing, fraudulent websites or direct attacks were three times higher than normal according to the Swiss National Cyber Security Centre (NCSC).

However, digital wallets do score points here since it’s much harder to commit transaction fraud when biometric authentication, either by fingerprint or face scan, is required to complete purchases.

Although the use of contactless cards and e-wallets will continue to grow, we will continue to see a mix of payment options in the future regardless which payment methods are currently preferred.

Many Swiss still reach for their rappens when making smaller purchases and over 50% still pay for purchases with invoices.

We are unly to see the Swiss go the way of some 4,000 Swedes who have implanted microchips in their arm to pay for purchases in a very sci-fi way.

Nevertheless, banks and payment providers should be fast-tracking their digital innovation efforts and ramping up their analytics and data management tools. As more customers shift to digital and mobile payments, there will be a greater demand of security, privacy and control of ones data. This will be paramount as these newer payment methods aim to dethrone cash’s long reign.


Kristi Egerth – Manager, Client & Industries


Cash, long a refuge in uncertain times, now under suspicion

Cash is still king in the United States — but for how much longer?

Beirut — In troubled times, people have been known to hoard currency at home — a financial security blanket against deep uncertainty. But in this crisis, things are different. This time cash itself, passed from hand to hand across neighborhoods, cities and societies just the coronavirus, is a source of suspicion rather than reassurance.

No longer a thing to be shoved mindlessly into a pocket, tucked into a worn wallet or thrown casually on a kitchen counter, money's status has changed during the virus era — perhaps irrevocably. The pandemic has also reawakened debate about the continued viability of what has been the physical lifeblood of global economies: paper money and coins.

From the supermarkets of the United States and Japan to the shantytowns of Africa to the gas stations of Tehran, a growing number of businesses and individuals worldwide have stopped using banknotes in fear that physical currency, handled by tens of thousands of people over their useful life, could be a vector for the spreading coronavirus.

In this March 19, 2020, file photo, Jorge Otero, owner of a fruit and vegetables stand, wears gloves as he exchanges cash with a customer, during a government curfew aimed at curbing cases of the new coronavirus in San Juan, Puerto Rico. (Photo: Carlos Giusti, AP)

Public officials and health experts have said that the risk of transferring the virus from person to person through the use of money is minimal. That hasn't stopped businesses from refusing to accept currency, and some countries from urging citizens to stop using banknotes altogether.

In the midst of the coronavirus era, a thousand calculations are made before cash is handled — mostly with gloved hands. Some leave the money laid out on surfaces for days, for the virus to die.

Others disinfect banknotes with spray. Some even microwave them in the belief it kills the virus.

In China, banks are now required to sterilize cash with ultraviolet light or heat, then store notes for at least a week before they are given to customers.

“In many areas, cash was already beginning to disappear due the increased risk of robbery, the ease of internet ordering, and the ubiquity of cell phones,” says Zachary Cohle, an assistant professor at the department of economics at Quinnipiac University in Connecticut.

“Cash,” Cohle says, “now carries an extra stigma.”

But is ditching cash altogether even feasible?

Sweden, Finland, Norway, Canada and others have slowly phased out cash to the point where using it in large amounts seems suspicious. The United Kingdom and Australia are among countries expected to become cashless societies. And in China, use of cash by consumers has plunged as smartphone-based payment services rose in popularity over the past decade.

But for much of the rest of the world, letting go of cash is difficult if not impossible.

'Cash ist fesch!'

Humans have a centuries-old emotional relationship with physical money that is difficult to erase.

“Currency represents value that we can hold in our hands. Cash provides a way for us to translate a day’s work into something tangible and easily traded,” Cohle says. “We may not know what goods we will need in the future. However, holding money allows for us to feel as though we can buy whatever goods we will need.”

“Cash ist Fesch” is a common saying in Austria and southern Germany. The phrase, which literally means cash is beautiful, reflects both countries' attachment to cash — and not just among the older generation or those who worry about the loss of privacy that comes with cashless payments, but also among some younger people who see it as a status symbol.

“I always pay with cash — as a matter of principle!” Ingel Strobl, a 76-year-old pensioner, says while shopping at a bakery in central Vienna. “I know they want to abolish cash. But I don’t want that we lose our right to our own money. You know what I mean anyway! I stick to cash — corona or not.”’

Since the virus outbreak, however, shops that have remained open, grocery stores, have posted signs encouraging people to pay with cards. Many are: According to Germany’s central bank, the Bundesbank, 43% of people have changed their payment behavior in the past few weeks; now, a large percentage are ly to make contactless payments with a card.

Japan, for its sophisticated reputation, is also a solid believer in cash, which makes up for 53% of a household’s assets, according to the Bank of Japan. The belief in “cash is king” reigns, though the country has had zero interest rates for two decades, far longer than the rest of the developed world.

But the threat of the coronavirus could be the impetus the nation needed to move toward going cashless, said Hiroki Maruyama, who heads the Fintech Association of Japan, a nonprofit that supports innovation in financial services.

“The culture,” he says, “is slowly changing.”

Cash in a crisis

“Cash combined with courage in a crisis is priceless,” billionaire investor Warren Buffett says.

In crisis-hit countries and parts of the world gripped by conflict or inflation, cash is still carried in thick wads for simple shopping expeditions.

In Lebanon, as the economic situation deteriorated late last year and the fear of banks collapsing mounted, many people began saving cash in their homes. The sale of home safes surged. An estimated $3 billion was withdrawn and stashed at home, according to the governor of the country's Central Bank.

As banks imposed capital controls, trips to the bank to withdraw foreign currency — followed by a trip to one of the ubiquitous exchange shops to change money on the black market — became the norm for many Lebanese.

“All I do is handle cash all day,” said one money changer in Beirut, who insisted on being identified by his first name, Ihsan. He said he feared unwanted attention from authorities.

“I wear gloves. But honestly? Corona is the last thing on people’s minds right now,” Ihsan said. “All they’re thinking about is how to handle this crisis and get money to live.”

In this May, 2, 2020, photo, a man uses banknotes to pay for his purchases at the mall in Basra, Iraq. (Photo: Nabill al-Jurani, AP)

In Iran, one of the world’s worst coronavirus hotspots, there are no international bank cards, Visa or Mastercard, because of U.S. sanctions. Many were surprised at the new banners that appeared at some gas stations in Tehran: “Service is only for those who will pay by debit cards.”

In Venezuela, it is common to see bolivars littering the streets because the local currency has lost its value.

“The truth is that I haven’t had any bolivars in my wallet for a long time,” said Fátima Figueras, a 32-year-old office worker, waiting in line to enter a Caracas pharmacy. “What worries me most is having to hand my debit card to a cashier who touches it,” said Figueras, wearing a facemask against the coronavirus.

Cash still rules in West and Central Africa even with the growth in regional banking options and mobile money service providers. Monthly banking account fees are prohibitive for many, and the self-employed often keep their savings at home in hard currency. ATM machines often don’t work.

Dorothy Harpool, director of student and community initiatives and lecturer at Wichita State University's W. Frank Barton School of Business, predicted the pandemic would lead some consumers to rethink their use of cash. But going completely cashless, she says, is a long way off.

In this March 30, 2020, photo, Zandile Mlotshwa, 21, cashier at Spar supermarket in the Norwood suburb of Johannesburg, South Africa, counts her cash at the end of her shift. (Photo: Jerome Delay, AP)

“Until everyone and every country has reliable access to the internet, I do not believe the pandemic will singularly change past practices,” Harpool said. In particular, cash transactions are also ly to remain for businesses operating under the radar of government and other regulatory bodies.

Ihsan, the Beirut money changer, said there are certain things you just can’t do without cash — particularly in a dysfunctional and developing nation.

“ how else can you bribe a government employee to get your business done? With a credit card?”

Associated Press journalists David Rising in Berlin, Philipp Jenne in Vienna, Yuri Kageyama in Tokyo, Jorge Rueda and Scott Smith in Caracas, Krista Larson in Dakar, Senegal and Amir Vahdat in Tehran contributed reporting. Follow Zeina Karam, AP news director for Lebanon, Syria and Iraq, on at http://.com/zkaram

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