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Cash stuffing, also referred to as money stuffing, is a viral budgeting method that involves using cash to pay for things like gas, groceries, and other discretionary purchases. Popularized on TikTok, cash stuffing has become a hot money hack for curbing impulsive spending.

While it might look brand-new, money stuffing is an updated take on the cash envelope budgeting method. With the cash envelope method, you’re simply adding cash to different envelopes that represent individual budget categories.

Does cash stuffing keep you from overspending? And how do you get started? Here’s a closer look at how this budgeting trend works.

What Is Cash Stuffing?

Cash stuffing is a budgeting method that requires you to use cash for discretionary spending instead of a debit or credit card. You add cash to individual envelopes labeled with different categories and then use those funds to make purchases. Once the envelope is empty, you can’t spend any more money in that category until your new budget period (say, the next month or next pay period) begins.

The idea behind cash stuffing is to keep spending in check. It plays into the psychology of money, which suggests that spending cash is more painful mentally and emotionally. Also, using cash may make you more mindful about your spending. Perhaps, when you think about pulling out a 10-dollar bill to buy a bubble tea, you’ll decide it’s not really worth the expense (or at least not today).

Cash stuffing can be a way to help you spend less. It may be easy to swipe your debit or credit card without thinking about the dollar amount. That’s harder to do when you’re having to count out cash pulled from your wallet or bank account each time you want to spend.

How Does Cash Stuffing Work?

Cash stuffing is a revamped version of the cash envelope method. In terms of the actual process, it works like this:

•   First, you decide which budget categories you want to assign to your envelopes. For instance, you might include entertainment, coffee, and massages. (You can also use folders or pouches in a budget binder; whatever works for you is a good choice.)

•   Next, figure out how much cash should be added to each envelope for the budgeting period.

•   At the beginning of the budgeting period, you “stuff” each of your envelopes with the allotted amount of cash.

•   Throughout the budgeting period, you spend down the cash in each envelope.

When you reach the end of the budgeting period, you start the process all over again. If you have cash left over from the previous period, you can roll it over or apply it to another financial goal, like building your emergency fund. That’s a plus if you struggle with finding motivation to save money.

Meanwhile, you’d still use your debit cards, credit card, or bank account to pay expenses not assigned to your cash envelopes. For example, you might set up an automatic payment from checking to cover your student loan payment and pay your electric bill online using your debit card.

Examples of Cash Stuffing

Cash stuffing is ideal for budgeting categories that are not fixed and may fluctuate from month to month. Some of the categories you might assign to your cash stuffing envelopes include the purely discretionary as well as those that combine needs and wants:

•   Gas

•   Groceries

•   Clothing

•   Personal care

•   Entertainment

•   Dining out

•   Hobbies and recreation

•   Extracurriculars, if you have kids

•   Pet care

•   Travel

•   Gifts

•   “Fun” money

You could also include a miscellaneous envelope to cover any expenses that don’t fit into another budget category.

Why Did Cash Stuffing Get So Popular?

Cash stuffing breathed new life into the cash envelope budgeting method largely thanks to social media. On TikTok, #cashstuffing and its related hashtags currently have about 3 billion views. There are countless clips of users, which largely include members of Gen Z, stuffing their monthly cash envelopes.

Part of the appeal of cash stuffing lies in its simplicity. Once you figure out your budgeting categories and envelopes for the month, all you have to do is repeat the process.

Cash stuffing can work with lots of different budget systems, including:

•   The 50/30/20 budget rule

•   Zero-based budgeting

•   Pay yourself first budgeting

It can also be an easy way to save money if you’re disciplined about keeping track of your cash envelopes and curtailing unnecessary spending. Cash stuffing requires you to be intentional with where and how you spend, so you don’t run out of cash midway through the month.

People who struggle with using credit cards responsibly can reduce their odds of racking up high-interest debt, since they’re using cash to pay in place of plastic. Cash stuffing puts you in control of where your money goes, instead of leaving you to wonder at the end of the month where it all went.

Pros of Cash Stuffing

Cash stuffing has some advantages, especially for people who are navigating budgeting for beginners. You don’t have to be a member of Gen Z to appreciate its usefulness either.

Here are some of the main upsides of cash stuffing.

•   It’s simple. Cash stuffing is an uncomplicated way to budget for discretionary expenses. All you need to get started is a stack of envelopes and some cash.

•   Encourages saving. Stuffing cash envelopes can promote a savings habit if you’re challenging yourself to spend less than what you’ve allocated to individual budget categories. The money you don’t spend can be put into a savings account, perhaps one earmarked for your emergency fund.

•   Track spending. As you spend down the cash in your envelopes, you can easily see at a glance how much cash you have left. You can write down each expense as you go to get an idea of where you tend to spend the most.

•   Avoid debt. Minimizing your dependence on debt is key to creating a financial plan that works. The cash stuffing system can help you break away from credit cards if you’re reliant on them and help you learn to live within your means.

Cons of Cash Stuffing

Is cash stuffing right for everyone? Not necessarily, as there are some drawbacks to keep in mind.

•   It’s time-consuming. Once you get your cash stuffing system in place, you can set it and forget it. But there is some upfront planning that’s required to get your system started, and you have to revisit it each month to restuff your envelopes.

•   You could still overspend. There’s no rule that says you can’t dip into one cash envelope to cover expenses for another envelope. That could make it all too easy to blow your budget.

•   Less protection. Losing a credit card or debit card is a pain, but there are built-in protections if someone uses your card to make unauthorized transactions. Cash, on the other hand, offers no such benefit. If you lose it or it’s stolen, it might be gone for good.

•   Missed opportunities for growth. Saving money is a good thing, and the cash stuffing method could help you do that. But you could be missing out on earning a great interest rate if you’re keeping all of your money in cash, versus depositing some of it into a high-yield savings account.

Tips on Getting Started With Cash Stuffing

If you’re ready to give cash stuffing a try, getting started isn’t that difficult. Here are a few tips for making the most of the cash stuffing budgeting method.

•   Review your budget, and break down all of your individual spending categories.

•   Decide which of those budget categories you want to use cash to pay for each month, noting which expenses you’ll pay for using your debit or credit card.

•   Calculate how much cash you should assign to each category, based on how much you’ve spent on average in the previous three to six months.

•   Choose the cash stuffing system that works best for you (i.e., cash envelopes, a budget binder, folders, etc.).

•   Decide which day of the month you’ll stuff your envelopes, based on when you get paid.

It’s also a good idea to give yourself a cash cushion when setting up a cash stuffing system. Depending on how regular your paychecks are, it may take a pay cycle or two to get used to stuffing envelopes. Keeping a few hundred dollars extra in checking that you don’t touch can help you cover any gaps in your budget until you’ve found your cash stuffing groove.

Alternatives to Cash Stuffing

Cash stuffing is one way to track and manage spending each month. If you’d rather not carry around cash, you could still apply the same basic premise in a different way.

Here are some alternatives to cash stuffing.

•   Use gift cards or prepaid debit cards. Instead of putting cash into separate envelopes, you could purchase gift cards for a set amount each month. For example, you might buy a gift card for $500 to your favorite grocery store in order to make a month’s worth of weekly food runs. That can keep you from overspending, without having to carry cash.

•   Try a budgeting app. Budgeting apps sync with your bank account and credit card accounts to track your spending. They also allow you to divide up expenses into individual budget categories each month. You could set your categories then assign each one a dollar amount, but instead of using cash, you’d use your debit card to pay for those expenses instead. (Your bank’s app may offer tools to help with this.)

•   Open a dedicated account. If you’d like to use a debit card to cover discretionary expenses, you might open a separate checking account just for that purpose. You could link it to the account where you deposit your paychecks, and then transfer over a set amount of money each payday. One thing to keep in mind, however, is that overspending could put you at risk of overdraft fees.

The Takeaway

Cash stuffing is one way to tackle the task of budgeting and to get in the habit of tracking spending regularly. It involves designating your discretionary spending categories, allocating your budget for those expenses, and then using cash (and only cash) to pay for those purchases. This can help you avoid overspending and high-interest credit card debt.

Having the right checking and savings account can help you manage your budget better, too.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Is cash stuffing better than debit cards?

Cash stuffing can be better than using debit cards in the sense that it forces you to keep track of what you spend. Using cash to pay requires you to be intentional or mindful with your money since you don’t have an unlimited amount of money to work with.

Is cash stuffing better than credit cards?

Cash stuffing can be preferable to credit cards if you’re worried about accumulating high-interest debt. When you pay with a credit card, you’re using the credit card company’s money, which has to be repaid later with interest. When you pay with cash, you’re not creating debt or incurring interest charges.

Is cash stuffing a fad or a long-term strategy?

Cash stuffing has become a viral trend, but the idea behind it is a tried and true budgeting method. It’s possible to use cash stuffing or cash envelope budgeting for the long-term to manage your money and keep tabs on what you’re spending each month.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

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