A cash-only lifestyle can help you stop reckless spending and save for your future. But it also hinders you from building a credit score, which is critical for taking out an auto loan or mortgage, renting an apartment, getting good rates on insurance, and more.

The internet is littered with TikTok stars and financial gurus (like Dave Ramsey) who swear by a cash-only lifestyle. They tout it as the best way to save for your future and live debt-free.

All their talk may have you wondering: is it possible to live on only cash? And is going cash-only a good idea? Let’s discuss the pros and cons so you can decide for yourself.

But first… what does it mean to have a cash-only lifestyle?

What is a cash-only lifestyle?

A cash-only lifestyle means you only use cash for all your purchases. It means no credit cards. No loans. Nothing that resembles “debt” in any way.

The cash-only community is split on whether debit cards are allowed. Some say it’s okay because a debit card is linked to the money in your bank account.

Others argue you should also ditch debit cards and only use paper currency. Their reasoning is that debit cards are still a form of plastic and can trick you into spending more than you should.

Pros and cons of a cash-only lifestyle

A cash-only lifestyle promises freedom and peace of mind. But there are both pros and cons to be aware of.

Pro: Forces you to live within your means

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Many people switch to a cash-only lifestyle because they’re tired:

  • Tired of reckless spending.
  • Tired of mountains of debt.
  • Tired of feeling like they have no money.

They see a cash-only lifestyle as a way to stop the bleeding — to force themselves to live within their means so they have no choice but to do better.

And if you’re the kind of person who needs extreme barriers in place to get your finances in order, a cash-only lifestyle could work.

Read more: Why you’re living above your means — and you don’t even know it!

Pro: Helps you save and avoid debt

Another pro of the cash-only lifestyle is that it can help you save money and avoid debt.

When you use cash, you are much less likely to impulse buy or overspend. This is because you can physically see how much money you have, and when it’s gone, it’s gone. With credit cards, it’s easy to lose track of your spending and rack up a lot of debt.

The cash-only lifestyle can also help you avoid interest fees and other charges that come with credit cards. When you use cash, you never have to worry about paying interest on your purchases.

Read more: How to pay off credit card debt fast — the smart way

Pro: Makes you aware of your spending

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A lot of people like the cash-only lifestyle because it shines a light on where they’re spending their money. It also forces them to think about every decision they make beforehand.

If they add that pack of cookies to the grocery cart, will they have enough cash to cover it when they get to the register? If they use a chunk of their savings for a vacation, will they be able to afford a new vehicle?

Life is full of trade-offs. But it can be hard to see just how many trade-offs there are when credit is always available. But with a cash lifestyle, you’re forced to slow down, think, and be more mindful with your spending.

Read more: How mindfulness can help you save money

Con: You have no credit score

It may come as a surprise, but you need a credit score for almost everything:

  • To get a loan.
  • To buy a car.
  • To rent an apartment.
  • To get a credit card.
  • For utility deposits.
  • For a cellphone plan.
  • For car insurance rates.
  • For employment.

While it’s not technically impossible to live without a credit score, it can make life incredibly difficult. So it’s something to keep in mind if you plan on adopting a cash-only lifestyle long-term.

Read more: Living without a credit score is possible – but is it wise?

Con: You could lose your cash

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While credit cards and checks can be replaced if they’re lost or stolen, cash doesn’t work that way. If you lose it, there’s no way to get it back.

This can be a major downside of the cash-only lifestyle, especially if it requires you to carry a large amount of cash on you. Plus, it can make you a target for thieves.

Con: Cash isn’t accepted everywhere

Not all businesses accept cash, which can be frustrating if you’re trying to stick to a cash-only lifestyle.

Some businesses, like rental car companies and hotels, may require a credit card to hold a reservation. Additionally, online retailers and many self-checkout kiosks don’t accept cash.

Read more: What countries are going cashless? And why you should too

Con: You’ll still have financial stress

While a cash-only lifestyle can help you save money, it doesn’t make your financial stress disappear. If anything, it can lead to different types of financial stress.

For instance, on top of having to make tough decisions about where to spend your money, you have to:

  • Visit the bank each time you get paid.
  • Stay within your ATM withdrawal limits.
  • Create your cash envelope system.
  • Keep track of all the stores you can’t go to.

Additionally, you may worry about what you’d do if an emergency happened and you didn’t have enough cash on-hand to cover it

For some people, a cash-only lifestyle can be too restrictive and cause more financial stress than it relieves. If this is the case, it may be best to find a different way to manage your money.

Alternatives to a cash-only lifestyle

A cash-only lifestyle isn’t the only way to get your finances in order. Here are two other approaches you could try:

Try a zero-based budget

A zero-based budget is a system where your income minus your expenses equals zero.

The benefit of this method is that you’re forced to account for every dollar you earn. You can’t just let money “disappear” into thin air.

It’s a great alternative to a cash-only lifestyle because you have to plan ahead. It makes it really difficult to take on more debt.

But unlike being cash-only, it allows for more flexibility because you can use any payment methods you like — cash, debit cards, credit cards, financing, you name it.

Read more: Which budget system is best for you?

Do a hybrid approach

With a hybrid approach, you can use cash for some expenses and plastic for others.

For example, you may use cash for your everyday spending like groceries and gas. But you may put larger purchases on a credit card to earn rewards points.

Or maybe you use cash for discretionary spending like eating out and entertainment. But you use direct deposit for your rent and bills.

The key is to find what works best for you and your budget.

Read more: How to use a credit card responsibly

Final verdict

A cash-only lifestyle can be a great way to stay out of debt and get your finances in order in the short term. But it may not be a good long-term approach.

If you’re considering a cash-only lifestyle, weigh the pros and cons to see if it’s a good fit for you.

Featured image: Dmitry Lobanov/Shutterstock.com

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About the author

Cassidy Horton
Total Articles: 37
Cassidy Horton is a finance writer who specializes in banking and insurance. She earned her MBA and bachelor’s degree in public relations from Georgia Southern University — and has since published hundreds of finance articles online for Forbes Advisor, The Balance, Money, Finder.com, and more. When she's not helping Millennials and Gen Zers gain control of their finances, you can find Cassidy hiking around the Pacific Northwest, cuddling her two cats, and eating way too much fried chicken. Connect with her on cassidyhorton.com or LinkedIn to see what she’s up to next.