We Spend Coins Faster than Bills

by Debt Destroyer on May 18, 2009

Lately I’m becoming an expert on the psychology of spending money, and it’s all thanks to my trusty radio.

Last month I wrote about a story I heard on NPR which said that we can save money by carrying big bills.   Earlier this week I heard another story which goes hand-in-hand with the big bill story. According to this story, not only will we hold onto a $100 longer than five $20’s, but we’ll also keep a $1 longer than we will 4 quarters.

coin-stack-quarter-nickel-pennyI did some head scratching while listening to it.

They talked about a couple of studies which show that people will spend coins faster than bills. The studies were interesting, and they got me thinking back to my days at an office job.  Back then, if I had change in my pocket, I’d probably pay a visit to the vending machine.  But I’d hardly break a $1 for the same snacky goodness.

The lady went on to say that if the Obama Administration wanted to stimulate the economy they should increase circulation of $1 coins and introduce a $2 coin.

That comment reminded me a story I heard the previous day on NPR, on how the opposite is actually happening.

The US Mint is producing 70% fewer coins this year compared to last year.

They said that a key factor in the reduction was the economic slowdown.

“The Mint’s mission is primarily to make coins to fulfill the demands of commerce,” says Ed Moy, director of the Mint. “The demands of commerce haven’t been doing too well the past six months.

They also mentioned that more people have been saving coins and turning them back into the bank.

“So in addition to low economic activity, there’s an increased number of coins coming back into the banking system, which means that the banks need less coins from the Mint,” says Moy.

So while the penny is not being retired, there will be less of them floating around. In fact collectors are grabbing up.  According to the story a 50-cent roll of Lincoln Bicentennial pennies is selling on eBay for up to $10.

Yet another head scratching moment.

So how do you handle coins?  Do you spend them as soon as you get them, do you roll them up and put them in the bank, or do you scour ebay and look for coins to add to you collection?

Until next time,


PS  The piece of info I found most interesting in these stories was the fact that the U.S. Mint funds its own operations through sales of collectible and bullion coins. Last year it made a $750 million profit for the U.S. Treasury.

{ 8 comments… read them below or add one }

Baker @ ManVsDebt May 18, 2009 at 12:08 pm

Very interesting. I love these type of studies. I absolutely agree that I tend to spend coins more than dollars. I also cave in when spending ones much more than when breaking a twenty.

We use the envelope system to help fight this a little. For example, I’m far less likely to pull coins or dollars out of an envelope marked groceries, than to spend them if they were just in my pocket.

Cool stuff!


The Weakonomist May 18, 2009 at 8:43 pm

The high dollar deonominations came as no surprise to me when I heard about this a few weeks ago. What I didn’t hear about was the coins, that really does surprise me.

It sounds like you’ve been turned on to the world of behavioral finance, welcome! If you want some book ideas shoot me an email.


Lulu May 19, 2009 at 9:59 am

I don’t carry cash so I don’t have the problem of carrying coins around. I do pick up pennies I find on the ground and those go in a sandwich bag at home until I have enough to roll and take to the bank.


Debt Destroyer May 20, 2009 at 11:03 pm

Thanks for taking the time to comment.

@ Baker – The envelope system has helped me too.

@ The Weakonomist – My summer reading list is already pretty long, but if I need a change of pace I will take you up on a book recommendation.

@Lulu – About how long does it take to find a roll of pennies lying around?


Lindsay May 25, 2009 at 1:23 am

I suppose it depends on the person. The only time I spend coins is if I’m going through the drive through at the coffee hut or something and I have nothing better to do than find exact change (I tend to just dump whatever coins I get in my drink holder in the car). These days coins almost seem so worthless that it’s hardly worth the effort to carry them around and try to use them.

Yay for inflation. :\

I do believe that psychologically I’m a lot more likely to spend money I never see (as with a swipe of the old debit card) than bills.


Randy @ Buy Morgan Dollars May 27, 2009 at 10:43 pm

Great study. I always spend my loose change like it is burning a hole in my pocket. I never really count my change so I don’t know the total that I have.

My wife uses her version of the envelope system. She has money in piles all over the house set aside for various bills and expenses. It does work


Car Insurance Phi May 29, 2009 at 3:30 pm

I absolutely see your point on this, but I tend to never spend my change and end up having a thick wallet full of lesser bills.


Jonathan@Friends&Money November 21, 2012 at 4:39 pm

I know that there are lots of people who collect coins, in the hope that in the future they will become collectors items. It’s great idea really but it’s a long term decision and one that might not even pay off if the coins you collect don’t become collectors items!


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