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Can clean cash help you save?

By David McMillin ·
Thursday, November 22, 2012
Posted: 6 am ET

Struggling to add to your savings account? You might want to start ironing your dollar bills.

In a study released earlier this year titled "Money Isn't Everything, but It Helps If It Doesn't Look Used: How the Physical Appearance of Money Influences Spending," two Canadian professors proved that consumers' spending patterns are tied to the physical appearance of the money in their wallets. Professor Fabrizio Di Muro at the University of Winnipeg and professor Theodore J. Noseworthy at the University of Guelph ran a series of tests to track participants' attitudes and activities with old, crumpled bills versus new, clean bills. When participants used old money, they spent money more quickly than participants who used crisp bills.

Plastic versus paper bills?

Some personal finance experts advocate the benefits of moving to an all-cash diet, but this study has me thinking that an all-cash diet might not actually make consumers count their money that closely. Instead, they may actually be more inclined to spend it, depending on how it looks.

While the study did not test how consumers spend with debit cards versus cash, Noseworthy says that plastic may prove to be a better friends for consumers, looking to keep their savings and checking balances higher.

"I would suspect that you may spend more with more bills than with a debit card," Noseworthy says. "It would seem the sole reliance on cash could indeed backfire."

As millions of Americans prepare to search for deals on Black Friday and spend their money throughout the holiday season, the study's results may be useful for shoppers who head to stores with a wallet full of cash. If you're looking to spend less, you may be better off using your debit card. If you do, you'll want to make sure that you're tracking what's coming out of your checking account to avoid falling below any minimum balance requirement or even worse, being slapped with overdraft fees.

What do you think of the study? Do you look to get rid of dirty dollar bills more quickly than your clean cash?

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November 29, 2012 at 9:07 pm

Hey, even our local farmers market takes Food Stamps(EBT0 now...

November 22, 2012 at 10:23 am

I think everyone is wired a bit differently.

However, on a large scale, consider this: Why do you think McDonalds takes credit cards?