A cashless society could spell trouble for those who are already not good at managing their personal finance, let alone in the digital space.

Budget coach and CEO of Budget Leaf Kerron Clarke says with more e-payment systems, consumer spending will increase, but it will be a detriment to some.

“There are people now that don’t know how to manage the physical money that they see and touch every single day. If people have to be swiping their cards or using their cards online, nine times out of 10 they are going to end up spending more than what they want to,” Clarke said Keron Clarke, in an interview with the Jamaica Observer.

According to data from the Bank of Jamaica (BOJ), e-payments are steadily increasing. “Total volume of retail payment transactions processed during 2022 amounted to 141.6 million, valued at $4.7 trillion.” This is an increase of 9.9 per cent in volume of transactions from 2021. And transactions processed on point of sale (POS) terminals also increased in volume by 14.3 per cent (or 2.9 million additional transactions) to approximately 23.4 million transactions, relative to the previous year, according to the BOJ’s data.

While the adoption of these payment systems is encouraged to drive Jamaica to become a cashless society, Clarke said the country is not ready to go cashless, as most of her clients seeking budgeting advice do so after finding themselves in credit card debt.

“So I’m just thinking if you can’t manage a credit card, then going cashless will be difficult,” she added.

She explained that in most cases, people in need of budgeting services lack awareness, discipline and consistency to properly manage their money. She added that when money is in its physical forms, such as notes and coins, people tend to place a higher value on the same amount of money than they would during an electronic or card-based transaction.

“One of the things I always tell my clients to do is to draw the physical money and spend mostly cash, so if you know you want to spend $10,000 on the road, walk with only $10,000 versus if you have $100,000 on your card you can easily spend more,” she said.

She further explained that it’s simply too easy to overspend when you’re not looking at a finite, physical sum of cash in your wallet or purse, so careful budgeting becomes important.

But a massive benefit of all these digital transactions is traceability. Digital wallet apps allow users to track their transactions and expenses, and so too do online bank statements. This can allow consumers to use them to be more thoughtful towards their money and promote better money management. However, said Clarke, it will only work for those who are conscious of their spending.

“If they have the discipline to go back through their bank statements, categorise and see exactly how much they are spending in each category, then yes, that would be a lot cleaner for budgeting purposes, but how many people will actually do that?” she asked.

Education on how to manage personal finance digitally will be needed, and budget coaches will now have to reshape the way they offer personal budgeting advice. For Clarke, in a digital space, she says her advice will only be so limited.

“Go through their bank statements, categorise, see where and how much they spend and in what category — with that they can know where to reduce where to save money.”