What is Cash Stuffing? And Could It Work for You?

There are countless ways to budget, and these days many of them involve mobile apps and online or digital planning systems. But sometimes, the old ways work the best, at least for some people.

The art of ‘cash stuffing’ is being heralded as a ‘new TikTok trend’. The concept is certainly trending on TikTok, due to the amount of social media influencers posting videos of themselves doing their weekly (or monthly) cash stuffing. But the idea isn’t actually anything new. It’s the way many people used to budget in the days before personal finance went digital.

So What Is Cash Stuffing, Exactly?

It’s pretty much what it sounds like. You take the amount of cash you have in your weekly or monthly budget. Then you stuff it into envelopes marked with what that cash is to be spent on, such as food, gas, or entertainment.

It is perhaps an idea whose time has come, especially as people get back into using cash again after the pandemic which forced so many of us into digital forms of payment, sometimes with unfortunate consequences. Studies suggest that we spend more when using a credit card, and even more when using a mobile payment app.

Part of the reason cash stuffing is trending on social media, and particularly on video sites such as TikTok, is that it’s actually a very visual way of budgeting. Influencers such as Canadian Girl Cash Stuffer are posting videos of themselves literally stuffing large wads of cash into envelopes, or custom made categorized wallets, and there’s something very entertaining about it. But does cash stuffing really work? And are there any drawbacks?

The Pros and Cons of Cash Stuffing

Many cash stuffing advantages are based on how we feel about spending real money, as opposed to making card or digital payments. It’s long been common advice that if you run up credit card and charge card debt, it could help to actually draw your cash out and spend it. Paying with cash can, for some people, really focus us on how much we’re spending and on what. Sometimes, when we spend through cards, online payment systems, and apps such as Apple Pay, it can make us feel like we’re not dealing with real money, so we’re more likely to overspend.

The cash stuffing method follows the often quoted advice to ‘give every dollar a job’. You’re literally putting each note into an envelope marked with the job that that particular note is going to do. This can make you much more mindful of the way to spend your money, and may encourage you to physically move money out of one envelope and into another that’s more important to you.

If you really commit to it, the money in each envelope is exactly what you have to spend on that category, so it then encourages more mindful and careful spending within each category. If you start to commit to only taking a certain amount of cash out with you, whether on a shopping trip or a social occasion, you literally can’t overspend. With no banking app on your phone, or credit card in your wallet, there’s simply no opportunity to spend more than you planned.

But Are There Disadvantages with Cash Stuffing?

There are definitely a few problems that can crop up with this system. Using cash for everything simply isn’t practical. Larger payments like your rent or mortgage, along with things like paying for utilities, pretty much have to be done digitally. Most cash stuffers use this method mainly for their day-to-day discretionary spending, but even then it doesn’t work perfectly.

For example, some places simply no longer accept cash payments. It also doesn’t work when shopping online. The more committed cash stuffers can get around this, by using a pre-paid card loaded with the exact amount of money they’ve budgeted for such occasions, as opposed to a regular debit or credit card.

It can also be a security risk. Carrying large sums of money around means there’s more of a risk of the money being lost or stolen, and unlike with credit or debit cards you can’t just let your bank know and get payments frozen. You might also want to consider the safety elements. If your plans change and you end up somewhere you didn’t plan to be, there’s no extra money for a taxi home.

It’s also important to note that using cash won’t automatically make you stick to a budget. It will tend to make you more mindful of your spending and put barriers in place to stop impulse buying and mindless overspending. But those who are determined to overspend will still be able to dip into their regular bank account when they feel the need.

Is There a Digital Alternative to Cash Stuffing?

Some of the advantages of cash stuffing come from the way that handling real money trains your brain to think more carefully about spending. However, if all you want to do is assign every dollar to a specific category, then yes there are digital ways to do that.

Some budgeting apps, such as Mint and Emma, will allow you to link your bank account to the app, track spending across categories, and basically allow you budget in a similar way to cash stuffing, without ever handling cash.

It may not feel as satisfying as traditional cash stuffing, but if it works for you, it can alleviate the inconvenience of always having to carry, and pay with, cash.

In the midst of the current cost of living crisis, budgeting has never been more important for many of us. Whether you use the cash stuffing method, or a digital alternative, keeping track of exactly what you’re spending on will help you set limits, save money and meet your financial goals.

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Disclaimer: This article is intended for informational purposes only and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

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