"Cash stuffing" is all over TikTok — but is it a good way to budget your money? (2024)

FAQs

"Cash stuffing" is all over TikTok — but is it a good way to budget your money? ›

Bottom line. Cash stuffing might appeal to consumers who prefer simplicity or have problems with impulse control. But the risk of having all that cash around — not to mention missing out on interest and card rewards — should make you think twice before labeling all those envelopes.

Bottom line. Cash stuffing, like other budgeting methods, is a way to plan out your spending and keep track of expenses. While it can be helpful for curbing overspending and limiting credit card debt, the downside of budgeting with cash is that you're missing out on the protection and yields offered by bank accounts.

Cash stuffing involves taking your spending money, converting it to cash and stuffing it into envelopes marked with spending categories like rent, bills, groceries and gas. You determine how much money you want to spend in each category on a weekly or monthly basis.

Cash stuffing can help you save money, but it can leave you vulnerable to theft and other risks. Digital budgeting apps, bank accounts, and credit cards can help you build a financial foundation for the future.

You may also feel unsafe carrying cash, as it's harder to track it when it's lost or stolen. It can be cumbersome to get started: Getting all the envelopes ready and allocating money into categories can take some time to set it all up, especially if you haven't created a budget before.

The 50-30-20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should dedicate 20% to savings, leaving 30% to be spent on things you want but don't necessarily need.

Instead of stuffing your spending envelopes with cash, use gift cards. At the beginning of the month, purchase gift cards that correspond with your various spending categories. For example, you might get one card for groceries, another for gas and another to use for entertainment purchases.

Budgeting with this cash envelope method may help you limit overspending—but keeping too much of your money in cash can keep you away from the benefits of bank accounts, credit cards, and digital finance tools.

While you're working, we recommend you set aside at least $1,000 for emergencies to start and then build up to an amount that can cover three to six months of expenses. When you've retired, consider a cash reserve that might help cover one to two years of spending needs.

It's a simple, cheap method to introduce into your life. It limits impulsive spending. It can restrict overspending effectively (especially if, for example, you choose to leave your card at home on a night out and only take your allocated cash with you).

Why hiding cash at home is a huge mistake? ›

You could lose the money

You might not hang on to your hidden money for as long as you'd think. You could lose it to fire or theft, or you could forget where you hid it. What Are the Red Flags for Bogus Remote Jobs?

Even though it is technically not illegal to travel with large amounts of cash, it is definitely suspicious to many law enforcement officers. Carrying a large amount of cash can result in asset forfeiture and seizure, even if you are not arrested for an offense. Welcome to the world of asset forfeiture.

People hide money and income to evade creditors, dodge judgments, avoid taxes and conceal criminal activity.

Explanation: A cash budget estimates future cash flows for a business for a period of time. Depreciation expense is a non-cash item and would never appear on a cash budget. Cash budgets only track real cash receipts and disbursem*nts.

To begin, a good rule to follow is the 50/30/20 method: 50% of funds go to needs, 30% wants and 20% to financial goals. Make an envelope for each category that applies: rent, utilities, phone bill, gas, groceries, emergency, savings and leisure. Put aside cash in each envelope corresponding to the amount used.

In the 50/20/30 budget, 50% of your net income should go to your needs, 20% should go to savings, and 30% should go to your wants. If you've read the Essentials of Budgeting, you're already familiar with the idea of wants and needs. This budget recommends a specific balance for your spending on wants and needs.

Monthly savings from using cash at the supermarket can be as high as 25%, according to Business Insider. Savings could be even greater, according Forbes, which found that consumers are likely to spend twice as much when using a credit card instead of cash.

Why? With an emergency fund, you'll want to be able to access your cash in a pinch and protect your principal. However, if you're saving for retirement, you probably won't tap that cash for years or even decades and, therefore, can take on more risk.

You should keep a consistent amount of money in your register at the start of each day or shift, such as $100. This ensures you have enough cash to give change to your customers.