Budgeting is an essential skill. Trends emerge when people are ready to try new financial strategies, especially if they see one on social media.
TikTok recently got everyone talking about the ‘cash stuffing’ or ‘envelope’ method.
In this article, we’ll explore the straightforward budgeting idea to see if it could revitalise your finances.
Everything you should know about the cash stuffing TikTok trend
Cash stuffing is a TikTok trend where people cash their paychecks and budget with paper money and physical envelopes. The strategy is flexible to your individual goals and organisational preferences.
Some TikTok content creators even turned it into an autonomous sensory meridian response (ASMR) experience by demonstrating money-stuffing techniques in a quiet room with a sensitive microphone.
Does cash stuffing help with money management?
Withdrawing your paycheck at the bank can help you manage money if you know how to organise the cash. Some people use paper envelopes, while others prefer binders with silicone pockets.
The most crucial part about cash stuffing is knowing where your money goes. Label your envelopes with the name of each bill or what savings goal you’re working toward.
You might enjoy the popular financial strategy once you decide how to allocate every paycheck.
@stephtalksmoney Cash Stuffing my Paycheck 💕✨ #cashstuffingasmr #cashstuffingenvelopes #cashstuffingsystem #paydayroutine #fypシ ♬ original sound – Stephtalksmoney
Pros and cons of cash stuffing
Before converting your paychecks into physical currency, it’s important to learn about the pros and cons of this money management strategy.
While some people find it beneficial, others prefer using digital funds. When you understand this method better, you’ll know which one is right for you.
Pro: You may only spend what you have
The biggest appeal of cash stuffing is that it’s harder to overspend.
There’s no ability to swipe a card and use more than what’s in your checking account. You must make conscious decisions to part with your money and accept what’s left over after each purchase. You may reduce your credit card usage if you only buy in cash.
It could prevent you from increasing your credit card debt, saving you money on interest payments. In the last quarter of 2024, the average credit card interest rate was 22.80 per cent, which could cost you hundreds of dollars each month. You’re more likely to reduce your monthly payments if you’re not adding to your credit card balance.
Con: Participants miss savings account benefits
People also join the cash stuffing trend to improve their savings.
You may feel more excited to see a pile of money grow than your digital account total increase. However, savings accounts can improve your investments in more ways than one.
If you decide to save for retirement with physical currency, you miss out on strategies that passively boost your savings and could lose value due to inflation. People who use a tax-advantaged retirement savings account profit even more through investment returns.
High-interest savings accounts can also provide monthly dividend deposits. Compound interest payments are an easy way to increase your savings without drawing more from your paychecks. You won’t get beneficial interest rates by keeping envelopes filled with money.
Pro: It might improve your mental health
Accidentally overspending or making impulse purchases can add stress to your life. You might feel discouraged about your financial decisions and anxious because you’ll owe more later.
Pulling money from an envelope may improve your mental health because the reduced amount of money in your possession becomes physical. Watching a full envelope become nearly empty could be the accountability you need to curb your spending. If you spend less money, the stress related to your former purchasing habits might disappear.
If you’re buying less, you might even start feeling more grateful for what you already have. You’ll learn to see the value in your belongings and fix them before replacing them. Being more present with what you appreciate about your life is another way cash stuffing may benefit your mental health.
Con: An accident could cost you everything
Money management strategies don’t only prioritise what you need right now. They also consider potential risks.
If you put your income away in an account backed by the Federal Deposit Insurance Corporation (FDIC), the independent agency will pay back your losses up to a set amount if your bank goes under.
You won’t have the same protection if you keep your savings in a physical envelope. Fire stations receive reports about home structure fires every 95 seconds on average, which could eventually include your house. An accident might turn your money management progress into ash. Break-ins cause similar losses.
You’d have to start from scratch, which would devastate your finances if you made significant progress throughout the years.
Revamp your financial life
The cash stuffing TikTok trend is taking over the internet because it provides a fresh perspective for many people. After reading about this budgeting method, consider how to make the money management strategy work for you.
A change in pace could help you break spending habits or reach short-term savings goals. If you remember the pros and cons, you’ll make an informed decision that could benefit your financial goals.
And remember, this is only a trend. For professional and strategic money advice, we recommend to always speak with a qualified accountant or financial planner who can assess your unique circumstances and make recommendations tailored to your situation.
