An old-school money hack has become a viral sensation thanks to a fascination with “cash stuffing.” The strategy encourages people to pay for items with cash instead of using credit or debit cards. The money used for cash stuffing is typically stuffed in an envelope or somewhere else.
The idea of “cash stuffing” has tallied more than 700 million views on TikTok. Generation Z, born between 1997 and 2012, is primarily responsible for making this trend global.
Not all TikTok and Instagram users are stuffing envelopes with cash. Some individuals use a cash-stuffing binder as a budgeting tool. Others place cash in glass bottles until they need it for an emergency or impulsive purchase, at which point they shatter the bottle. Others hide money in old shoes, mason jars, coffee mugs, or even under their mattresses if they want to go old school.
Savvy savers using the “cash stuffing” strategy can earn interest by depositing their cash into savings accounts. This can be especially beneficial given that some savings accounts are currently paying more than they have in the past ten years.
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What Is Old Is New Again
Despite its popularity on social media platforms such as TikTok, cash stuffing is a concept that has been around for a while.
Cash stuffing is similar to “the envelope system,” a strategy that Dave Ramsey popularized. The envelope system is a simple budgeting method that involves splitting your money into different envelopes. Each envelope represents a different expense, such as food or rent.
As you spend the cash from each container, you know exactly how much you have left for that month.
If you end up with more money than you expected in your envelopes at the end of the month, you can put that money aside to build up your savings.
Whatever you want to call it, physically using money can help people get a clearer picture of the amount of money they have available or how much they intend to spend in the future.
Why Stuff Cash?
“Cash stuffing” is supposed to help people save money, build up savings, pay off debt, and avoid buying things online that they don’t need.
There are several potential benefits associated with the “cash stuffing” method, including:
- Increased awareness of spending habits and budgeting: By physically using cash for purchases, individuals can more easily monitor their expenses and track spending. This can help people stay on top of their finances and avoid overspending. Samantha Hawrylack. co-founder of How To FIRE explains cash stuffing forces you to “budget and have a plan for each dollar, making you more intentional and building good saving habits.”
- Saving money on fees: Credit and debit cards charge processing fees, which can quickly add up over time. Avoiding these fees by using cash allows you to save money in the long run.
- Building a savings cushion: Putting aside excess cash each month is a great way to build an emergency fund or save for larger purchases. Cash stuffing can help you reach your financial goals more quickly and easily.
- Building credit: Some experts recommend paying off cash purchases monthly to avoid accruing interest and building credit. Using this method, “cash stuffing” can improve your credit score over time
Bruce Mohr, the Senior Investment Advisor at Fair Credit, shares another benefit. He explains, “the most significant advantage of using a cash envelope is that once the money is gone, it’s gone, minimizing the risk of overspending. You are compelled to adopt a strict budgeting method. It requires advanced planning to avoid entering a store unprepared and making impulsive purchases. That’s it if there is no more money in the envelope.”
Cash Stuffing Isn’t Perfect
While “cash stuffing” may help some people save money and avoid debt, there are a few potential disadvantages to keep in mind.
- People who use this method may be less likely to shop online, which could impact their ability to find the best deals and discounts.
- Using cash can cause individuals to go over their budget since it’s harder to track spending.
- Cash can be easily stolen or lost, leaving you with less money than you intended.
- Cash stuffing restricts spending power because you are physically limited to the cash you have set aside for the various budget categories. This is also a benefit and the entire point of the system!
Words of Wisdom
Jay Zigmont, PhD, CFP, Founder of Childfree Wealth, leaves us with these wise words. “The key with any budget system is to keep making progress each month. Your first month will most likely not be perfect, just make an improvement next month.”
Stuff Your Cash
While the “cash stuffing” strategy may not be right for everyone, it can offer some benefits to those who can stick with it. So if you’re looking for a way to better manage your finances and build up your savings, it could be worth considering.
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Greg is a Chartered Financial Analyst (CFA) with 22+ years experience in Financial Services. He has held numerous FINRA Securities licenses (series 7, 63, 65, and 66), and is an expert on Investment Products and Financial Planning. Greg has 22+ years experience as a real estate investor and degrees in Psychology and Philosophy.
Greg has been quoted/interviewed in Yahoo Money, Yahoo Finance, USA Today, Authority Magazine, Realtor.com, Business Insider, and others.
Greg is an avid runner, and the father to identical twin girls and their awesome brother. His love of budgeting and his kids led him to join The Great Resignation in 2021.
Disclaimer: Any Financial Tips on ChaChingQueen are general and informational. Speak with a professional about your specific situation.