- Personal Finance
cash asset management
asset management: keep cash always
Idle cash earns no interest on investments. As a prudent wealth management strategy, keeping cash on hand, in savings accounts, etc., is not advised too! Moreover, many investment opportunities are available for us to invest it! Now there is another perspective. For purchases and settling bills, idle cash or debit card usage offers distinct advantages! It pays to maintain cash balances to the extent of 1 or 2 months' gross income either in person or in a lien free Bank account with a free debit card link.
asset management: less credit card usage
There is foremost financial advantage, which lies in paying for bills in cash. We have psychological disincentive to make wasteful expenditure as wealth reduction is immediately perceived! That perception may not be felt with credit card purchases. We may not indulge in impulsive buying at stores, online, etc., when paying by cash / debit card usage. .Secondly, we may resort to line of credit on home property to pay off the costly credit card debt later. Paying by cash effectively increases our bargaining power in all purchases.
improved personal cash balances increase self esteem and job motivation
Credit card loans will be paid off from alternative forms of borrowings. . This affects our existing loan repayment capacity as well as future loan raising eligibility. This might not be a welcome future when we require home loans, etc.
Keeping cash balances in person always increases one's self esteem, valuing his job, relations, motivation to perform better as employee, etc. Employee vices would also be curbed to a great extent. Relevant purchases only will be made to preserve the cash on hand. Spontaneous payment of bills in cash earns respect from goods/service providers. Some discount too can be negotiated. The merchant might also gladly consider cash discount as he saves on transaction costs with his Bank.
personal cash balances are an exigency
When we have sufficient cash on hand to invest, we may develop a tendency to save more! Constant newer streams of incomes will be explored and newer forms of investments will be considered.
When we have several dependents, we do not know their unforeseen finance requirements and keeping cash in person helps us in discharging our duties as spouse/parent/brother, etc and earning their love and affection instantly. Family bonds improve.
cash asset management
Cash is universally most accepted form of settlement even now by most of the merchant establishments. We can shop with definitely wider range of sellers. Most of the online suppliers perk up the selling prices to cover the settlement risk too! Revealing the credit card no. online is not a comfortable proposition either. One who has the good habit of purchases by cash personally visits a merchant establishment, considers several choices and negotiates for finer prices. This process ensures a prudent purchase decision.A prudential cash asset management ensures frugality.
Do security risks inhibit us from keeping adequate cash
Some of the security conscious among us might question the wisdom of carrying large cash balances with us as that does not earn any interest. Are such losses on returns of investments notional or real? What we earn from our Bank deposits will be always lower than what we pay on credit card borrowings.
tendency to invest in cash earning assets
Let us further ponder in this direction! With abundant cash on hand and with some prudence, wealth creating assets such as jewelry will be preferred for purchase rather than consumer electronics! There will be a shift in our cash spending purposes.
In contrast, covering purchases through credit cards gives a false sense of our true personal prosperity and gives a jaded view of our real savings and the ability to pay the future bill!
Certainly there are several advantages in retaining adequate cash balances!
Please give your valuable feedback.