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Hello and welcome to A Little Bit Richer, brought to you by LNG with me, Iona Bain. In today's digital world, our culture has shifted from cash to cashless and it's affecting how we manage our spending and future finances. Today, we want to talk about the role of cash in society and what we can do to put some friction back in our finances when our money is increasingly
digital. Here with me to discuss all this is friend of the show, Emmanuel Asuquo. Emmanuel is a financial advisor, TV presenter, motivational speaker, best-selling author with 15 years experience in financial consulting. Welcome back, Emmanuel.
Hey, Iona. How are you?
I'm good, thank you. Eman, we're seeing a lot online now about people returning to cash.
Yes.
Why do you think that's happening and what are the benefits of using cash?
Yeah, I think the reason I'm seeing people return to cash is just the fact that contactless is such a disconnect. One of the hardest parts about money is the fact that every day you step out of your house, somebody's trying to take money from you, not in a bad way, but just, " Here's a service that you can take," or, " Here's a product that I think you'd like." When you can tap that away, you have all the access to
all your money. Money just continues to go, and I always tell people, " Money flows. It comes in and it goes out." If you don't find blockers or you don't find ways to put your money in certain places, it will just leave your hands no matter how much you make. If I have 50 pounds and I'm only using cash, I can only spend the 50 pounds I have. No matter how much I want to spend 100, I
have access to 50. It helps you stop yourself when that impulse comes in because you're limited. Then, if you want to go and spend more, you have to go to the cash machine. When it's just tap, it just so simple, so easy, and it goes so fast. That's why so much more people are coming back to cash as a way to fill that connection to money because there's a pain. There's no pain when you're tapping away.
I think that's why people are coming back to cash.
Do you think that that shift in mentality can also benefit you if you're shopping a lot online? What you were describing about leaving the house and having commercial pressures, you don't even have to leave your house now. It's all there in your pocket on your phone, constant inducements to spend money through social media and internet shopping.
100%. I do this thing with my clients where I tell them, " Look, we've got a 48- hour rule," so even if you see the thing you want to buy and it's on sale and you're just like, you got to wait 48 hours. Do you know that with my clients, something like 75% of the time, they do not end up
buying it when they're back in their right mind. There's something about when you're online and you're spending and the deals are there and you think about, " Oh, I'll do this there and I'll do this there," and when you walked away and come back, you realize, " I got something similar in my wardrobe already," or, " I don't actually need that," but in the moment while the adrenaline is pumping,
you feel like, " I need this now. I can't live without it." Just giving yourself that gap. You could go to every shop you want to go to without ever leaving your house, and it becomes dangerous. There needs to be a delay. We've got more stuff than we actually need.
Delays are good for us sometimes.
Exactly. There needs to be a delay. There needs to be a pause to actually say, " Do I need this right now, or am I just buying this because I have the ability to?" Again, sometimes we are emotional spending. It's the, " I don't feel so good today, I'm going to buy myself something." " I've had a great day. I'm going to buy myself something." Whatever mood you're in.
Spending is the answer.
Yes.
Two things that have really helped me in terms of controlling my online spending. One is not having a digital wallet, at least for a period of time. If I have Apple or Google Pay, then it just makes spending too easy. Whereas, even if it is a case of having to get a card out of my purse, that puts a bit more friction into my finances. Then, the second
thing is removing automatic credit card details. When you are shopping online, the way it just fills all the forms. You know what?
Magically.
Yeah. Magically. Oh, well there we are, and there's no reason not to spend now. Not ticking that box to also fill my credit card details has definitely made a bit of a difference.
Yeah, I'm the same. I'm a big fan of using my chauffeur service through an app that I'm not going to mention, but also, I use that app for eating as well. If I know I've ordered a bit too much, then I'm going to uninstall for a period of time, so I have to get back on the bus, back on the train and back cooking in the kitchen.
Yeah. Do you think that also there's a correlation here between cash, helping you keep on top of your budget and being on a low income in the first place and really having to watch every penny? It's interesting. When I go to my local discount supermarket, the queue for the manned checkout is always really long, and that's because it's the only checkout that accepts cash.
Cash. Yeah. I think businesses are missing a trick. I get it. It feels great. You can go and just scan it and pay and go, but the reality is that for a lot of people, especially when money is tight, I can't afford to pay the wrong amount. I need to make sure that what I'm spending is I can actually afford. I need to give myself a budget. I think we don't think about it in that way, like you said, watching
every penny. I've seen my mum pour out her purse and count 5 Ps and 2 Ps to make up enough to buy what she needs to buy because that's all
the money she has. Sometimes, when you're tapping, you don't have that and then now, with overdrafts and all that, you're just getting yourself into more trouble and actually, coming back to cash and limiting yourself, it can feel negative, but actually can have a much more positive impact because you are living within your means. I think we have to go back to get into a society where actually it's okay to say no.
It is hard using cash now. A lot of shops won't accept it. You can't pay your bills with it. You can't save and invest with it. What are the difficulties of using cash?
It is so hard to use cash. I mean, I used to be a cashier in a bank. People would come in, they'd have their energy bill, they'd write how much they're going to pay, and we'd scan it through. We'd take the cash and pay their bills. Now, everything is direct debit. Everything is online. Again, you can't keep that control.
There are some big drawbacks to cash and I think you're going to feel very passionately about one of them, which is that sometimes people will say to me, " Well, can't I just put my money under the mattress," because that's clearly the safest thing to do, and yet people will be missing out on growth. Talk to me about why cash can't be the answer to all our financial problems.
Exactly. If you've got your life savings under a mattress, I totally understand that, but if you do get burgled or if there's an accident, all of a sudden, all your money's gone. No security, no safety, there's no protection on that. Whereas if it was in a bank account, you have protection. You have people that you can talk to say, " Look, this is my money and something's happened
to it." That's number one. Number two, inflation. We all know that 1, 000 pounds five years ago is probably around 600 pounds today. If you would've left it under the mattress, you might have gone back and said, " I've got 1, 000 pounds," but money is only valuable when you use it, and I don't think people understand that concept. What we do is we look at money and say, " I've got 1, 000
pounds today. Five years later, I've got another 1, 000 pounds. I still got 1, 000 pounds. I haven't lost anything," but actually if I go to spend that money and I can buy it less, then I've lost money in real terms. If we think about it, 50K used to be how much to buy a house. 50K is now not even
enough for a deposit in some places. If I've gone from a place of being able to buy and own a house to now only having enough for a deposit, I've lost money in real terms.
It's really hard for people to get their heads around that concept though, because it's quite abstract.
Exactly.
Once you grasp it, actually, you can never unknow it.
Never ever know it, and you just see it all the time. Then, like you mentioned, interest. Again, banks pay you interest for leaving your money with them so you get that growth.
How can we manage our money better when it would just be otherwise so easy to tap our money on that card reader and see it leave our account?
I think the main thing is your money mindset. When we talk about money being the root all evil and all that, it's people. It's all us as human beings, how we use money. Money is not the problem. Money is there to be used. It's how we use it that becomes
the problem. For me, it's about understanding your money mindset and how you look at money and dealing with your money trauma and the things that you've been through and how you express yourself when it comes to money. That is the first place that people really need to work on themselves on in regards to how they look at money, how they use money, what is their attitude to
money, and that's really, really important. Then it's about budgeting and for me, one of the best ways to budget, I know we've got all these online banks. For me, envelopes, I don't care what anyone says.
Really?
Going back to the envelope is the best place to get started. I have clients today that I made envelope. You have X amount for this week because you've got to teach yourself the discipline. Money is a habitual. If I build a good financial habit, that will continue.
You mean to say, withdraw cash, put it in an envelope that you need for that particular area of your life that week, and that's it.
That's it.
Right.
That's it. If you've got 100 pounds for the week. If on Monday you decide to spend 80 pounds, it's going to be a tough week. Do you know what I mean?
Yeah.
You need that experience. That's how I learn money. People ask, " Well, how did you get this mindset about?" No, I learned the hard way. I come from struggle. I come from not having a lot and having to look after it. It's one of the things I always worry about with my kids is that now they live a life of privilege. How do I make sure they understand the importance and the value of money? For me, having the envelopes,
now again, once you've done that, you can evolve. A lot of these other accounts now allow you to have pots and all of that, and that can be great, but until you can do it in the physical, I don't want you to do it in a digital.
Right. I see. If we follow the envelope approach and we can stick to only spending 100 pounds a week and we've passed that test, Eman gives us a big tick, then we can progress and graduate to digital ways of putting friction back into our finances.
Yes.
Have you got a few favorite strategies here?
My favorite is splitting your accounts up. One of the biggest mistakes I see people is that they have all their money in one account. It is a problem. It's a nightmare because Friday night, you look at your account, it's fit and healthy, and you think, " I'm going out. I'm going to have a good time." Monday morning, the direct debit's come out and you've messed yourself up, and it repeats every month. For me, have
an account for your bills. Number two is that there are banks that will pay you cash back for paying your bills from those accounts. You can actually make money paying your bills, and that way you can monitor. What I do with my bills account, every six months I
go in, I love football, and I renegade. I list them all, and the bottom three, I either get rid of or I call them up and ask for a better deal where possible.
That's a pretty ruthless approach you're taking there.
The thing is, what I've realized is that a lot of the time you have these subscriptions, I'm actually using it. I'm actually getting value from it. Why do I still have this? I might have a subscription, especially with kids. I might have a subscription. They used it for that period of time, but they're not using anymore. Because it's five pounds and it comes out monthly, I don't feel
it. I don't see it. It's just coming out. Actually, that's 60 pounds a year.
Whereas if you had to actually hand over that fiver, would you do it?
You wouldn't. You wouldn't, and you would've realized a long time ago. It is really important to look at your subscriptions and have an account for that. Then, I have a second account where I put myself on a budget. I have an account and I say, " Look, this is how much I have to spend," because one of the biggest problems with money is when you have access to all of your money.
When you have access to all of your money, you are causing yourself problems. What I do is I only give myself access to a portion of my money that I know that that's for me. I know my bills are paid, and then I have a savings account that I've put my savings in. Now, I can spend this money guilt free. One of the biggest things about budgeting is we feel
our budgets restrict you. Actually, a budget sets you free because I can spend this money however I want and know I've paid all my bills, I've saved for my goals, and now I'm free to spend this money and using the online bank. Either on Monzo or Starling, one of those types of banks where they're rude. They'll text you and tell you, " Oh, you spent more on takeout
this month." Nobody asked you, but thanks anyway. You can keep an eye on it, and it makes it so much easier for you to be able to be in control of your money.
Well, that's good because you don't then have to take all that responsibility on yourself. You're almost outsourcing the accountability to your bank.
Exactly, to your bank, and that's important. More and more banks are understanding the importance of their role as well. That's really important.
What are your feelings on having spending limits? I mean, would you advocate having a spending limit per day or per week? What are the pros and cons?
Yeah, I think spending limits are good for people who are impulse spenders. If you are someone that knows that if you walk into a shop and you smell certain smells or you see a yellow sticker, you're gone. Then, you need a limit how much you can spend because you're going to
overspend. If you are someone that's in more control, then maybe you just have a limit for the week or the month or whatever it may be, but also to understand that life happens. As much as you might have
spending limits, there might be an opportunity. For example, if I know I want to go on holiday and then there's a really good deal, does it make sense to me saving all the way up to the holiday and paying the higher price if I can get a 0% credit card and pay that now at a discount price
and then pay that off? We've got to be wise in our spending, but know that if I'm spending this now, what are the other sacrifices that I have to make? If I'm not prepared to give it up, then I'm not prepared to spend.
I have a theory that financial technology was once judged on how easy it could make everything. I think in the future, we will want financial technology that actually makes everything that little bit harder and will allow us to put these boundaries and this friction in place. Do you see financial technology evolving in that direction?
Yeah, I definitely do. We've seen with people having different accounts and pots that they can't get access to. You have a direct debit from your account into a pot, but you can't access that pot and it won't show up
on your online banking. We're seeing it already that actually, we have to hide money from ourselves because we naturally want to spend it, but we benefit from it because when you then look at it 12 months down the line, you're like, " Wow, I saved that much." It is really important. That's another hack that I always tell people, have a standing order on payday to your savings account, so you pay a like a bill.
Because actually, it has never been easier to save. That's the upside of all this.
Exactly.
You can really make it work for you in terms of how accessible this technology is, I mean, a good example is yesterday morning, I woke up and I saw within my banking app that there was an easy saver account available, paying 4%. I opened it within a minute.'.
Yeah.
Hey, Presto, I'm a saver.
Wonderful.
I'm not saying that's the first time I've ever saved money.
No, of course not.
Just in case anyone's wondering. It was just remarkable how easy it was to do that.
Yes.
How can we use these technologies to actually help us save money?
Yes. Like we're saying, it makes it easier to save, but also to invest for the longer term. Now, it's never been easier to open up a pension or stocks and shares I saw or invest in stocks. Using the technology has made it easier for us to invest as well longer
term. Just embracing it means that now, we are able to do things that maybe before we'd have to go to a bank to do or so forth, but we can now do ourselves and be in more control.
A good example of that is round up savings, right?
Yes.
If you spend 98 P and you have two P rounded up into a savings or investment pot, two P in and of itself is not going to add up to a lot, but over time it might make a bit of a difference.
No, definitely. And it's all about the habits. I always tell people sometimes it's not about getting rich. I think we think about, we've watched Wolf of Wall Street and all these other films, and we think, oh, we've got to invest this. Actually, just building up that habit. If I know that two P, 10 P, 15 P, every time I spend is going in there, it's
a habit. Once I built that habit and I've seen, okay, wow, I've put in 20 pounds this month, and now that 20 pounds is worth 25 pounds. Imagine if I had 100 pounds in there. Now you've got more confidence to say, " Actually, I can put a more regular amount in there because I see that this works over time." It's about
building those habits. Technology has made it easier. Before, if you wanted to invest, there was a barrier to entry.
Yeah.
Those barriers have been taken away. We've got to embrace the technology and start to make it work for us.
Brilliant. Well, let's end with three tips on how you can use the digital world of money to build your own wealth.
Great question. I'd say number one is to really understand your money. As we talked about, embrace the technology, understand where your money's coming in and out of, because people always tell me, " What's the cheat code? How can I make more money?" There's only two ways. You either make more money or you cut your costs. That's all we're
ever talking about really. You've got to, number one, understand where your money's coming from, where it's going, and then utilize the tools that are available to you. Number two is saving. Make sure you're getting the best on your savings. The money that you are able to save, make sure you're getting the best rates on your money and review that regularly. That's really important. Number three, feel free
to limit yourself. I think we are in a society that has no limits. We all want to have no limits, and we want to live life to the maximum, but actually embrace the fact that you can limit yourself and make it a bit tough. Make some friction in your money so that you can keep more of it.
Fantastic. The three tips are to build a better picture of your finances, try to save what you can and get that friction in your finances.
Love it.
That was so helpful. Thank you, Emmanuel. Next time, financial advisor and friend of the show, Bola Sol will be back to help us manage finances with our partners. I'd love it if you could follow the podcast, leave us a review and help others get a little bit richer too. You can keep up with the show on YouTube, TikTok and Instagram at Legal &; General. Until next time, see you soon.