Thanks to a mild obsession with so-called “cash stuffing” — which has racked up more than 700 million views on TikTok — Gen Z has made an old-school money hack a viral sensation.
Cash stuffing is a technique that encourages people to pay for things with cash, and as a result, they should end up saving more of their money. (That can be particularly lucrative these days, as some savings accounts are paying more than they have in a decade; see the best savings account rates you may get now here.) “Typically, the money you use for cash stuffing is stuffed away inside an envelope or binder until you need it. If you can’t afford something with the cash you stuffed away at the start of the month, then you go without it,” explains Jacob Channel, senior economist at LendingTree.
If this sounds familiar, that’s because it is: Cash stuffing mimics a strategy used by Dave Ramsey, known as the envelope system. Whatever you call it, Channel says that being able to tangibly hold and count money can give people a better sense of just how much money they have or are planning to spend. “If you end up with extra cash in your envelopes at the end of the month, you can turn around and stash it away to boost your savings,” says Channel. (See the best savings account rates you may get now here.)
“Psychologically, I’ve heard from several clients and colleagues that it’s more difficult to physically spend cash than swiping a debit or credit card,” says certified financial planner Jesse Wideman, Jr. at Facet Wealth.
Indeed, cash stuffing is designed to help people save money, build savings, pay down debt and eliminate mindless online shopping. “It has proven to serve as an effective way to save money … however like many things, it has pros and cons. I generally would highlight the strategy with people that have identified issues with variable and miscellaneous spending in a month or issues with spending too much on credit,” says Wideman. (See the best savings account rates you may get now here.)
Cash stuffing isn’t the answer for everyone, especially someone who shops frequently at card-only retailers, but Channel says someone who has trouble keeping track of their spending could benefit from using this method. Additionally, “someone with poor impulse control who can’t trust themselves not to spend money on non-necessities when all they have to do is swipe a card, and a person who doesn’t have much experience budgeting and who learns best when they can physically hold and sort their money could benefit,” says Channel.
Cash stuffing certainly limits spending power because you’re physically restricted to whatever cash you’ve set aside for your different budget categories, but like any trend, it’s not completely flawless. “One of the biggest issues is the problem that many cash positions carry, inflation,” says Wideman.
Another downside? “Cash stuffing can sometimes be overly restrictive, especially if a surprise emergency expense comes up. However, if you have an emergency fund set aside, you might not have to worry about this downside,” says Chanelle Bessette, banking specialist at NerdWallet. (See the best savings account rates you may get now here.)
McAtee says, if cash stuffing isn’t right for you, you may want to consider making a more stringent personal budget for all of your incomes and expenses. “Another way is to have a more holistic approach to budgeting by using your own system like Excel to help track your past financial transactions, monitor your current financial transactions and quickly adjust your future budgeting goals,” says McAtee.
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