The Cash stuffing concept got involved in a TikTok social media trend recently. However, before that many financial advisors had already been speaking about and had made many publications about it.
Even after the trend many people still missed out on what Cash Stuffing means but hey do not worry, in this article, I am going to explain what Cash Stuffing is all about.
What is Cash Stuffing?
Cash stuffing is a budgeting system where you pay for things only with the physical cash you’ve allotted for it.
In layman’s terms, it can also be seen as a budgeting method where you only use the actual money you’ve set aside to pay for items. The Cash stuffing concept also known as the envelope method indicates that you’re less inclined to squander away your valuable paper money on things like the current sale tab when it’s physical and accounted for.
You cashed the remaining amount after paying your fixed expenses (phone, housing, etc.) each time you received your salary. Then, you split that money among envelopes labeled “groceries,” “transportation,” “hobbies,” etc., and you only spent what was in each envelope.
Although spreadsheets and budgeting apps can be used for this, many individuals find that visualizing their expenditures with actual cash and envelopes works better.
Those who struggle with budgeting may find this to be a helpful tool, particularly when it comes to digital wallets, credit cards, and cash applications. However, it may be a laborious procedure, and it isn’t feasible for fixed expenses like auto insurance and school loans.
Similar to other budgeting techniques, cash stuffing is giving each dollar you earn a “job.” Following the process of identifying your budget categories and calculating the monthly amount you may spend on each, you deposit the funds into individual envelopes that are marked with the appropriate category names.
Is Cash Stuffing good for you?
Like any tool for managing your finances, cash stuffing works best when it helps you save, spend, and budget more effectively. Some people find the time commitment and need to carry actual currency inconvenient.
For others, cash stuffing could be a useful way to prevent debt and reduce expenditures.
Consider experimenting with the cash envelope approach if you’re interested in learning more. You may discover that it functions effectively or that it might be helpful for a certain expenditure category, such as entertainment alone. Alternatively, you may choose to apply the concepts of cash stuffing online using budgeting tools or spreadsheets.
Also following the cash stuffing can lead to you forfeiting your credit card benefits.
There may be advantages to using a credit card for payments if you pay off the entire amount each month. For example, you may accrue points that may be redeemed for cash back or funds for other costs, like vacation.
You cannot connect your bank account to your phone or email to get notified when you are about to exceed your spending limit because this is completely manual.