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Cash makes us even poorer

Do you want, as the grandfather of the heroine of one joke, “so that there are no poor”? Take away their money. In particular, cash – coins and pieces of paper. It is the despicable metal, which is in the hands of low-income citizens, and is their worst enemy. On the one hand, it is difficult to consider money as a problem if you can afford to heat a fireplace with them, for example.

Sometimes it seems that all we lack for complete happiness is a certain amount of multi-colored pieces of paper with watermarks. Saying yes to money, you say no to poverty – everything seems to be logical. A bundle of notes in a box with socks is seen only as a guarantee of a comfortable life and carefree old age.

The irony is that most people who love cash and get used to it, do not deny themselves the pleasure of using electronic money. Even those who are demented as credit cards are still buying magnetic cards to travel by public transport, use discount cards when shopping, have a bank account and try to pay for utility bills through terminals so as not to lose time in queues. Of course, it’s difficult to do without cash at all – you never know, you will need to leave a waiter for tea or buy a bottle of water in a stall. But, by and large, the better you feel financially, the less you need cash and the easier it is to avoid having to use it.

On the other hand, the poor – tens of millions of Americans and billions of people around the world – often have no other cash alternative and have to pay dearly for it. Vishnu Sridaran, an expert at the New America Foundation, believes that cash only “increases the number of risks the poor face every day and contributes to corruption in the bureaucratic environment.” Imagine: the savings that you literally kept all your life under a mattress are vulnerable to fire, thieves, drunk relatives or borrowing neighbors. Imagine that you need to spend several hours to pay bills or meet with a friend – to transfer him a certain amount of debt. The advantages of cards here become more obvious than ever.

Of course, any psychologist will say that, paying in cash, a person spends money more carefully, because he sees exactly how much and to whom he gives. When paying with a credit card, it’s easy to spend more than you expected – the money is somehow fake, you can’t hold it in your hands or look at it. But, at the same time, cash is useless reliance on the case of financial turmoil, and it’s very, very difficult to build a solid financial foundation from cash. Long-term investments — such as education, training, or the purchase of agricultural machinery to break the cycle of poverty — do not usually get along with cash.

So where is the solution to this problem? It is possible that in your pocket. According to forecasts, by 2014, about 90 percent of the world’s adult population will have a mobile phone. In order to manage your finances, it is not necessary to have a phone of the latest model: even with the simplest devices you can send and receive money – it is no more difficult than exchanging a pair of sms with another. Mobile technology will allow the poor to keep their money, albeit modest, in electronic form, and therefore – in safety. Still, there are far fewer Internet phishing scammers in the world than there are villains waiting for you in a dark gateway with a piece of armature. It is possible that in the near future ringing of coins or the rustling of bills will seem to others as strange as ringing on a payphone.

Electronic money and mobile technology alone will not be able to overcome poverty, this is obvious. However, innovations in e-banking promise to increase the transparency of financial transactions, make money more accessible, and help the poor not only get out of poverty, but also not to fall into poverty, said Roger Wuris, director of the financial services for the poor of the Bill and Melinda Foundation Gates. “If we can turn mobile phones into wallets and bank branches, we will ultimately do more to fight poverty than all the financial donations anyone has ever made,” concludes Vouris.

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