Demonetisation Woes? 5 Ways To Manage Your Household Expenses With Less Cash

The first week of December, there will be a huge demand for cash to manage household expenses, including paying salaries. What options exist to manage these expenses on less cash?

Demonetisation has made us think twice before making any payments in cash. We don’t have much cash at home, given the limits to ATM and cash withdrawals at bank branches.

We are familiar with online shopping, movie tickets, travel and hotel booking. However, we are used to making cash payments to the domestic help, the driver, laundry, milkman, medicines, newspaper, grocery, vegetables, flowers and so on.

Three reasons why we should try digital modes:

• There will be a rush at the bank branches and queues at ATMs. We could avoid the queues by making payments through digital modes.
• There is still a limit to the amount that you can withdraw through ATMs and bank branches. Even if these are relaxed in the coming days, we would be getting high denomination notes that are difficult to exchange.
• We will be putting undue pressure on the banking system where the employees have been working overtime already to manage the huge exercise for the past three weeks.

This is our chance to make a difference; to learn and adopt digital modes of payment to avoid rushing to ATMs and bank branches.

Here are five simple ways you can manage household expenses with less cash:

Electronic Funds Transfer: NEFT

You can transfer money from your bank account through Internet banking to any bank account. I asked the two women who come home to help us with our domestic chores whether they have bank accounts and if they accept payment to their bank account.

To my surprise, both said yes. “I do have a bank account. I have a debit card. And I receive messages of transactions on my mobile phone.”  The women told me with pride. I was worried that I had to convince them to accept an electronic transfer. They gave me a pleasant surprise.

What details do you require to do an NEFT?

• Beneficiary Name
• Bank account number
• Bank Name and branch address
• IFSC code – This is a eleven digit code – the first four digits represent the bank and next seven digits represent the branch.

I got all the above details from the passbook/chequebook that the women brought. If the IFSC code is not printed on the chequebook/passbook, you can still find the same by checking for the bank name and branch address on google.

An NEFT is a three-step process:

• You register a new payee giving the above four details on your bank website.
• You will get a confirmation number on your mobile phone. Key in the confirmation number on your site.
• You can make a funds transfer to the payee account.

Mobile Payments

Mobile banking of banks:

I use the mobile app of my bank to do funds transfer through my mobile. I just need two details – Payee account number and IFSC code. With this I have been able to make instant funds transfer using IMPS. This is faster than Internet banking.

The NPCI (National Payments Corporation of India) has come up with two new options for instant funds transfer between any bank accounts.

UPI – Unified payment interface

IMPS – Immediate mobile payment service.

Check out the NCPI website for inputs on how to use UPI and IMPS.

E Wallets

These are the easiest and most convenient.

• Download the app on your mobile
• Register with your mobile number/email id
• Transfer funds to payee mobile number.

I use Ola Money or Paytm to pay for my cab rides. The fare is automatically debited to the wallet – no fumbling for cash in your purse and no haggling for change. There are many more wallets like Payu, Freecharge, and Mobiquik.

Banks have also come out with e-wallets that can be downloaded even by non-customers. Pockets by ICICI Bank, and Buddy by SBI are some examples.

This is a convenient method to provide pocket money to your children and train them to use digital channels.

Credit card/Debit card

I have started making even small payments of ₹ 100 or ₹ 200 through credit cards – the local medical stores, supermarkets, fashion stores, parlours accept cards.

Cheque

This is the last resort. Some of the vendors – for eg., our newspaper distributor has agreed to accept cheques.

There are some people who still accept only cash – the local grocery store, the vegetable vendor, doctors, some hospitals, and some restaurants. I hope the day is not far off when these people will also accept payments through cards and e-wallets.

With so many digital payments options we can easily plan to ‘go cashless’ for most of our payments and manage with less cash at home.

How do you plan to manage your household expenses this month with less cash?

Top image credits Connie Ma used via Flickr (Creative Commons license 2.0) 

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