As life progresses, our daily activities become more convenient than ever, especially in terms of online payments and transactions. Just 3 to 4 years ago, we were used to paying in cash, but now, scanning QR codes or swiping bank cards has become a daily habit for many people. However, everything has two sides, convenience always comes with hidden issues.

Where does the money go?

Having just received a salary of 20 million VND for the previous half month of work, when 27-year-old Thanh Huyen living in District 3, Ho Chi Minh City checked her bank account, she was shocked to find only over 1 million VND left in her account. She described this feeling as being robbed because she didn't think she could spend almost all of her salary in just half a month. Upon reviewing her transactions, Huyen discovered that she had made over 100 purchases including clothes, shoes, food, cosmetics, plane tickets, and hotel bookings for her upcoming trip, with many of these transactions made in the early morning while browsing social media.

Huyen's habit of not carrying cash with her has been around for about 3 years since QR code payment apps and electronic wallet payments became popular. All of her expenses take place entirely on her smartphone. However, from spending about 10 million VND per month in the past, she now frequently runs out of money before the end of the month. Huyen thought that not seeing the money spent would result in less spending, but in reality, she spends even more because there are card swipe machines or transfer options everywhere.

Two years ago, 40-year-old Bao Chau living in Hai Phong used cash regularly for monthly expenses, dividing her single mother's salary into smaller amounts for necessary expenses while saving the rest. However, since receiving her salary through her bank account, Chau has shifted to preferring online payments. This has disrupted her previous financial management plan for the total monthly salary of 30 million VND for the couple. Previously, they could save nearly 50% of their income, but now, every month, they spend all their salary on paying electricity and water bills, school fees for their child, shopping for clothes and food, and even borrowing money from friends, all done through online transfers.

The cashless effect

Cashless Effect

This phenomenon was named by Associate Professor Doctor Do Minh Cuong, former lecturer at the University of Economics, National University of Hanoi, as the cashless effect, indicating those who tend to spend more when not using cash. According to the US financial website Net wallet, cash is a tangible object with emotional value attached to it. When spending, seeing the money disappear from the wallet easily triggers the pain of having to spend money. But with bank cards or online payments, transactions and deduction notifications usually do not make consumers feel remorseful, and they tend to continue spending recklessly. A market research by John and BR street company in 2023 also showed that people tend to spend 12 to 18% more when using cards instead of cash.

According to Associate Professor Cuong, the advancement of digital technology and the ability to transfer money quickly have made many people prefer cashless payments. This is also a common trend in developed countries towards a more convenient and comfortable life thanks to technology applications. A study on the payment attitudes of Vietnamese consumers in 2023 conducted by Visa showed that the average time a Vietnamese person does not use cash is 11 consecutive days in a month, nearly four times higher than in 2022. 56% of the surveyed individuals said they carry less cash, leading to less cash kept in their wallets and reduced cash usage. According to Visa, 62% of the surveyed individuals frequently use digital payments an average of 16 times per month, higher than the 12 to 13 times when using bank cards.

Vietnam leads Southeast Asia in the percentage of people who have used cashless payments, with 88% of the population, and is also among the top countries with rapid growth in the use of e-wallets. According to Fin group, every year in Vietnam, at least four people use e-wallets regularly, mostly in the age group from 18 to 40. The State Bank of Vietnam's data shows that by January 2024, the country had nearly 21,000 ATMs, a 2% decrease compared to the same period in 2023. The issue of overloaded ATMs during the Tet holiday no longer occurs. However, every issue has two sides: fast and convenient online payments, but still pose many risks such as overspending, falling into debt if financial management is not smart.

Associate Professor Cuong stated that with Ms. Thanh Huyen, linking too many e-wallets and uncontrolled shopping habits have led her to frequently live in debt, often having to rely on her parents or borrow from friends to cover living expenses at the end of the month. She tried to go back to using cash to better manage her expenses, but faced difficulties in finding ATMs to withdraw money and feared losing money when carrying a lot of cash, so she gave up early. Huyen shared that modern technology makes shopping more convenient but also makes saving much more difficult. Whether using cash or keeping money in the card, she easily spends all that money without thinking.

In addition to using electronic transfers, Ms. Bao Chau also uses credit cards for shopping. However, due to a lack of understanding of the regulations on credit card usage, she often delays in paying off the debt, resulting in increasing monthly interest payments. There was a time when, due to not being able to control expenses, she only had to bear a penalty of up to 20 million VND in just one month.

Risk of Losing Money

In addition to the risk of overspending, Associate Professor Doctor Do Minh Cuong also warns that excessive reliance on online payment transfers also exposes many people to issues such as transferring money incorrectly, entering the wrong amount, or becoming victims of asset theft scams through accessing unfamiliar links containing malicious code. Ms. Mai Anh in Thanh Xuan district, Hanoi is an example. Since switching to online payments, she has lost money several times due to serious mistakes, the most severe case being when she entered 200,000 VND but the system processed a transaction of 20 million VND.

According to personal finance experts, applying the 50-30-20 money management rule means allocating 50% of the salary to essential needs, 30% for flexible spending, and 20% for savings and investments. These amounts need to be separated and not combined. However, according to Associate Professor Cuong, some extreme solutions such as using only cash or dividing money into multiple different card accounts should not be encouraged, as the more card accounts a person has, the more tempted they are to spend more, even leading to debt burdens if not paid on time. Experts also advise that before using different types of bank cards, individuals should carefully study the features and uses of each type to avoid risks.

Turn scientific advancements into serving a better life rather than falling into debt. Thanh Anh, a 30-year-old living in Ho Chi Minh City, once fell into a pile of debt due to using payment cards for all expenses in life. However, he has now begun to apply some measures to better control his expenses, with the desire to save more to be able to buy a house before the age of 35.

Specifically, every time Thanh Anh receives his salary, he separates the money for different purposes, with 30% allocated for daily living expenses kept in the card and only allowing himself to spend within limits. He shared that this method helps him better control his money more effectively when the balance in the card is depleted. He will know when to stop instead of continuously shopping without thinking about the consequences.

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