Myth: Only criminals use banknotes

Financial Exclusion

Sections of Irish society may find it difficult to make the transition to electronic forms of payment from the traditional paper based methods such as cash.

The two key issues here relate to financial exclusion and barriers to electronic payments. For many, the problem is one of financial exclusion.

One fifth (20%) of Irish households do not have a current account and low income has the biggest impact on being financially excluded

Low income consumers (whether banked or unbanked) face a number of barriers in using electronic payments which remain a less attractive proposition than cash based money management.

This is because a cash budget offers low income consumers control, certainty, flexibility and visibility as they can see their money and keep track of their spending on a daily and weekly basis. Conversely, low income consumers fear that if they use electronic payments they could end up spending too much, they are not able to earmark income and they cannot keep track of their finances. Lack of security and fear of fraud also present a real barrier to moving away from cash. Low income consumers face particular barriers in relation to direct debits as they do not suit their weekly budgeting cycle, they fear losing control of their finances and direct debits offer little flexibility. Low income consumers also fear going into debt or unauthorised overdraft as this could incur default charges. Similarly, debit cards can make low income money management difficult as it can be hard to keep track of what is spent, money cannot be earmarked, and often small amounts of money cannot be withdrawn from ATMs.

Furthermore, using cash-back facilities requires something to be purchased, which may be an unnecessary extra expense, and there is sometimes a small charge on low value debit card purchases.

Elderly: There are groups of older people for whom changing to modern payment methods may tend to be difficult, impractical and/or problematic. This includes those who do not currently have a current account and for whom cash is their only form of payment method, those who do not have IT skills, those on very low incomes, and those with reduced mental capacity.

Members of the Travelling Community: Many Travellers on low income who have never operated a bank account will have extreme difficulty in managing a low income electronically

People in Debt: A concern was expressed is that if people in debt used electronic transaction methods rather than cash that all income they would receive or generate would be offset in the first instance against any overdue debts they may have

People with low levels of financial awareness: Such people may not understand how to budget and deal with their finances in a manner that will keep their debt to a minimum

Rural Dwellers and people in outlying, peripheral urban areas: People living in rural Ireland whose only financial transactions take place in shops, post offices and other services which do not currently cater for electronic transactions. In addition the availability of appropriate and secure ICT infrastructure direct to the home, particularly in older properties and in rural locations, can be an issue.

People with low literacy and numeracy: People with literacy and numeracy challenges may have difficulty or need support with reading terms and conditions and statements related to transactions and banking. Issues with numeracy may be more difficult with the absence of ‘cash in hand’, which is more tangible and ‘see able’ than electronic money

People with limited computer literacy and computer access: Anybody who is not computer literate or without the appropriate equipment will find it very difficult to make a change. This would include older people, but also households without access to a home computer or smartphone

Migrants: Migrants and minority ethnic groups may face particular challenges with regard to lack of knowledge of the Irish financial services system, language issues, and religious issues regarding financial services. ¹⁰⁹

HOW MUCH PHYSICAL CASH DO YOU NEED ON HAND IN CASE OF A NATIONAL EMERGENCY?

Picture this: You’re fast asleep one night when suddenly, you’re abruptly woken up by the sounds of a raging Martian attack on Planet Earth. The aliens have raided the world’s banks and obliterated every ATM with their radioactive lasers, so you have no access to your savings account.

To make matters worse, there’s also a zombie apocalypse happening at the same time, and you’re forced to flee your home, on the run in the dark night, with little in the way of resources to stave off the monsters. How much physical currency would you need to survive?

Part of being prepared for any contingency, big or small, is having a reserve of emergency cash at your disposal at all times.

Despite what many sources say, there’s no magic amount you should have nestled away in your emergency fund. Some say $500, others $1,000. Still others suggest three to six months of pay. Suze Orman’s magic number is eight months of living expenses. You might aim for a conservative $10,000, or more.

You should do what feels right to you. No matter the amount, an emergency fund is absolutely necessary — make it a priority. In fact, financial gurus like Jim Wang of Bargaineering, or Dave Ramsey say to build up your own reserves fully expecting an emergency: “It’s not a matter of if these events will happen,” Ramsey says, “it’s simply a matter of when.” ¹¹⁰