Time to learn some economics from our friends in Deutschland. It appears that there is one thing Germans do more than anyone (at least in the industrialized world): pay with cash.
That’s right, bringing the paper money and forgoing credit cards (or heck, even debit cards) appears to be quite the trend – and it has been for a long time – in Germany. An article that recently appeared in the online magazine Quartz spells out the reasons in greater detail. Here’s a link to the article from Quartz.
And here’s a chart that shows just how far ahead of the US the Germans are in the cash payment category.
Why? And, more importantly, what can we learn – especially as we work together to put an extra 10K away every year? Some thoughts:
Germans Don’t Like Debt
The article is teeming with examples of the German dislike of debt. This is smart – heck, we’d all love to get out of debt, right?
“Just 33% of Germans said they had a credit card back in 2011. And most of those hardly ever get used. In 2013, only 18% of payments in Germany were made via cards, compared to 50% in France and 59% in the UK.” Quartz, “Why Germans pay cash for almost everything,” Sept. 17, 2014)
Is it realistic for everyone else? Well, maybe, maybe not. But we’ve talked about the value of paying with cash a few times here. So it’s worth thinking about next time there’s a purchase to save for.
#1: Move Outside of the Banking System
Did you notice that, during the post-war economy, things like Camel and Chesterfield cigarettes and nylon stockings became currency?
We have talked about spreading yourself thinner – and not that we’re advocating stockpiling cigarettes or even Tide laundry detergent – but it’s important to at least be aware of ways to get outside the banking system.
OR: if your bank closed tomorrow and you couldn’t get to an ATM, what would you do?
#2: Hyperinflation: Could it Happen Again?
This is a question that’s in the back of pretty much every German’s mind. If they’re not old enough to remember the days when inflation was rampant – they are likely children of someone who lived through it.
The Quartz article talks about the long memory of those types of societies – the ones that have lived through crazy inflation:
“People in countries that suffered banking crises quite sensibly often prefer to save in cash—though typically in foreign currencies such as US dollars—rather than put money in the bank.” (Quartz, “Why Germans pay cash for almost everything,” Sept. 17, 2014)
Writing from an American point of view, I’m not sure I totally “get” it. But then I hear stories from my wife, who lived in Brazil in the late 80s, and watched that country go through all sorts of inflation, new currencies and price controls. Cash, where she was, certainly was king.
But Dave, you’re not answering the question: could hyperinflation happen again?
Well, we’re not sure “hyperinflation” could happen here. But we do need to prepare for the absolute worst: and, in the minds of some folks, it’s going to be an inflationary crazy time in the next few years, at least here in the States.
For instance, see this article talking about the folks from the book “Aftershock.” They’re much more doom-and-gloom than we are…but still, 100% inflation? What if they’re…just half-wrong?
Cash – Outside of US Dollars – and Gold and Silver
Yup, you guessed it – preparing for these sorts of things means that you have to look in the mirror and ask some really serious questions. Are you totally reliant on the US Dollar and your bank account?
Do you have access to anything else – Gold? Silver?
One Thing Germans Do More Than Anyone: Prepare
It’s one of the most precise – and prepared – societies on the planet. Maybe we should pay closer attention.