Tik Tokers have jumped on the bandwagon with a recent trend called ‘cash stuffing,’ also known as a ‘cash envelope system.’ The Sun even spoke to someone earlier this year who managed to save £10,000 for a house deposit using the viral budgeting craze.
Here we explain how cash stuffing works, and if it is the best way to budget.
WHAT IS CASH STUFFING?
Cash stuffing is a way of budgeting where you put money into different envelopes based on the categories you want to budget for. The envelopes are within a ‘cash stuffing wallet’ which are commonly bought on Amazon or Etsy.
The idea is that having physical money and a visualisation of what you are spending should make it easier to control your money and make it less tempting to overspend.
There’s even a chance it could reduce impulse buying as it’s making you think more before you make a purchase.
HOW CASH STUFFING WORKS IN FOUR STEPS
- Set your overall budget
First, just like starting any budgeting tool, you need to start off with an overall budget for the month. This is an amount you come to based on your total income and how much you think will cover all of your expenses. In the case of cash stuffing, these are expenses that are fixed and variable.
Fixed expenses are your direct debits that go out every month, for example your mortgage/ rent, energy bills and broadband.
Variable expenses are the ones that change from month to month, for example fuel and socialising.
- Set your categories
Once a budget is established, it’s time to set the categories you want to budget for. This section is different for each of us depending on our priorities, for example whether you have children will change you regular expenses.
A lot of Tik Tok users who have been cash stuffing for some months have 2 separate wallets, either because they have too many categories which don't fit in one wallet, or because they want to separate their categories even further.
One Tik Tok user had a wallet for everyday things like food, fuel and window cleaning, and another wallet dedicated to her children's' expenditure.
- Set your budget within the categories
Now you have to split your overall budget into ‘mini budgets’ for each category you have.
Imagine you had an overall budget of £500 for the month and you wanted to cash stuff for a food shop, socialising and savings. You would need to split the £500 between the 3 categories, so it may be £300 for a food shop, £100 for socialising and £100 for savings. This is just an example and would vary from person to person.
- Start filling your envelopes and spending your cash
After categories and budgets are set, it’s time to start filling these envelopes with cash and spending within your budget. Of course, if there is a need to adjust mid-month, you can do so.
At the end of the month, review what worked and what didn’t and adjust/ repeat for the following month.
WHICH TIK TOKERS ARE CASH STUFFING?
Here are our five of the most popular cash stuffing Tik Tok users:
Mum who budgets | @lisawooders
Mum who budgets has the top liked video for the term ‘cash stuffing UK’
Barbiebudgets | @barbiebudgets
Barbiebudgets content is full of cash stuffing and sells personalised budget binders
Yasmine talks money | @yasminecamilla
Yasmine talks money’s cash stuffing content has received up to 2.4 million views
She’s On A Budget | @shes.on.a.budget
She’s on a budget has a tab at the top of her Tik Tok feed dedicated to cash stuffing
Budgetwithdee | @budgetwithdee
Budgetwithdee has a whole account dedicated to cash stuffing budgeting and challenges
IS CASH STUFFING A GOOD WAY TO BUDGET? WE ASKED THE MONEY EXPERTS
Although cash stuffing is a recent trend, it mirrors how people used to budget before online banking and contactless payments took over. Here’s what the experts at The Money Edit have to say.
Contributing editor at The Money Edit, Ruth Emery, says: "I tried this approach when I first started university, but it didn't really work for me. I was worried about taking cash out with me, rather than just a debit card, in case I lost my bag or it was stolen. I also got frustrated if I only had a small amount of money with me (such as to buy a soft drink), and then I'd notice something I needed that was on special offer - like a book for uni - but because I didn't have enough money with me, I couldn't buy it.
"Fast-forward to today and I'd struggle to get on-board with this trend for several reasons. Firstly, many places near where I live don't accept cash. I'd also worry about the security element - carrying cash, and also when withdrawing cash from ATMs."
Writer at The Money Edit Katie Binns, says she can see the appeal of cash stuffing. "I've been mocked for it, but a cash routine for food and entertainment when I did a low-spend January basically forced me to control my spending. Most of us - whatever our income - currently have to find ways to turbo-charge our budgeting. If cash stuffing is the thing that helps you do that, do it!"
Personal Finance & Consumer Expert Sue Hayward, says: “I think setting yourself a weekly budget is always a good idea but I don’t think withdrawing it in cash is always easy or practical. Sticking notes in different envelopes and making sure you pop the change in the right one after spending could be a heap of hassle, plus many retailers still prefer card payment to cash in the current post pandemic climate.”
Sarah Handley, Money Editor at Good To Know says: “This cash stuffing trend is good in that it allows you to visualise your budgeting process, and because it's tangible cash, you know that when you've spent it, it's gone and you can't spend any more than you've put aside. But it's only really effective for budgeting for those activities where you would and could pay in cash, such as in-person shopping and entertainment.”
ALTERNATIVE WAYS OF BUDGETING
Budgeting can be done in various ways, it really depends on personal preference. Here are some options that our experts recommend.
Sue Hayward says: “Keep a money diary! Jotting down everything you spend, whether cash or card over a month can be a real eye opener as you can easily see where your money drains are. From snacks after the gym or treats in your lunch hour it’s easier to spot where your money is going and reign in spending.”
Money saving apps: We live in an age where we are glued to our phones, so what better than apps that can help you save money? Ruth Emery says: “If you need a helping hand in analysing your spending and creating a budget, check out free budgeting apps like Chip, and Money Dashboard." See our full list of The best money saving apps.
Katie Binns says: "Budgeting sounds boring and smug but once you find a way to balance your income and outgoings, clear any debt and put money aside for other things, the benefit to your emotional wellbeing is immense.
“Spend some time learning about your day-to-day spending habits. When and where do you spend and how does it make you feel? Can you cut out (or cut down on) the habits that don't bring much value to your day? Don't see budgeting as limiting: there's lots of ways to enjoy yourself for less."
All in all, it seems impractical to keep taking cash out to put into wallets, and it may prove to be harder to do this with fixed costs like your mortgage.
If you don’t live next to a free ATM this will be difficult to do, and remember that ATM’s set limits on how much money you can take out. Hence, it may be more trouble than it’s worth.
Also consider, fewer and fewer places accept cash, and you don’t want to be withdrawing money just to put it back in.
Cash stuffing might be more practical with your variable expenses such as fuel and socialising.
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Vaishali graduated in journalism from Leeds University. She has gained experience writing local stories around Leeds and Leicester, which includes writing for a university publication and Leicester Mercury.
She has also done some marketing and copywriting for businesses.
When she is not writing about personal finance, Vaishali likes to travel and she's a foodie.
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