Those of you who use TikTok have almost certainly caught wind of the craze known as “cash stuffing” which is now doing the rounds. Although this technique has been around for a while it has lately seen a surge in popularity among users in the Gen Z demographic who utilize the site and are seeking for creative methods to save money.
Cash stuffing is exactly what it sounds like: budgeting and conserving cash by inserting bank notes in labeled envelopes. If you don’t know what it is cash stuffing is a term that you should become familiar with.
There are two different ways to cash-fill envelopes. One method is keeping track of monthly expenditures with the use of labeled envelopes. This method requires a certain amount of self-control and stringent budgeting since according to the guidelines once an envelope is depleted the user is expected to wait until the next “restock” date before beginning the process again. This date is completely up to you to decide. For instance it may be the first of the month or the day you receive your paycheck every other week — whichever works best for your particular set of circumstances.
A second method of cash stuffing involves secreting away dollars in an envelope either with the purpose of using them in an unexpected circumstance or of storing up for a significant outlay such as a trip or a new vehicle.
Cash stuffing like most things in life has both cons and advantages associated with it. Just a handful are presented here.
The Cons of Cash Stuffing
- To begin it should go without saying that it is not the safest idea to have envelopes full of cash strewn about your house in random places. Because cash is susceptible to being stolen or damaged — for example in the case of a fire — this might cause all of your hard work to go up in flames. In addition it is possible to lose or misplace an envelope. It is quite unlikely that your insurance will compensate you for your losses under these circumstances.
- Your funds aren’t being kept in accounts that earn interest so they aren’t putting as much effort into making money for you as they could be.
- It is simple to spend money from a physical envelope designated for emergency use on something that is not necessary. In this scenario you can run into a situation that requires immediate attention before you have the opportunity to put fresh money into the account that you have set aside for such circumstances. Keeping drawbacks such as these in mind it is prudent to have a safety net in the form of a line of credit or an emergency money stashed away in a bank account. In the event that you do not have a safety net like this one personal online loans from Fora Credit may be able to assist you in a difficult financial situation in the event of an emergency when your funds have been drained.
- If you choose to manage your finances only via the use of cash stuffing you will not be able to build a credit score for yourself. This is a significant disadvantage for younger folks who do not possess credit cards that are accepted historically.
The Pros of Cash Stuffing
- The majority of these negatives also have some positive aspects! The use of cash stuffing is an excellent method for achieving fiscal accountability. If you can exercise self-control and restrict your spending to the amount of money that is available within your monthly budget you can accumulate significant savings over time and reduce the likelihood that you will run up debt.
- Cash stuffing has the potential to be a soothing and uplifting pastime in addition to adding a feeling of structure and control over your financial position.
- Your propensity to spend might be curtailed if you stick to using cash. To support this in a study at the Massachusetts Institute of Technology, researchers split a group of students down the middle. At a forthcoming auction, one set of people were told they needed cash while the other set were given the option to use a credit card. When the auction started students who had brought their ID cards often placed bids that were $60 more than those who had brought cash.
The Bottom Line
Cash stuffing may be fairly successful if you exercise self-discipline and maintain a healthy habit. This will give you complete control over your financial situation. The disadvantages on the other hand are overwhelming and include a number of significant dangers. This summer why not experiment with cash stuffing in conjunction with other more serious forms of financial protection if you want to set up a strategy for conserving money?
