Chances are you have seen the new saving method that is all the rage among Gen Z called cash stuffing. According to TikTok users this the best way for anyone to save money. In fact, if you search up the hashtag #cashstuffing on Tiktok, you’ll see just how popular it is, racking up more than 800 million views already.
But what is actually cash stuffing?
How does cash stuffing work
Cash stuffing involves withdrawing an amount of money from your bank account and dividing the money into categories that it will be spent on. So for example, you’ll allocate a part of that money for categories like transportation, leisure, and others.
Here’s an example of cash stuffing to help you visualise how it works. In this example, Ali is using the cash stuffing method to help plan his budget for the month after getting his pay.
| Ali’s Monthly Paycheck (RM2500) | |
|---|---|
| Category | Amount |
| Transportation | RM500 |
| Food | RM500 |
| Leisure | RM500 |
| Emergency | RM500 |
| Savings | RM500 |
So as you can see in this example, Ali divided up his RM2500 salary into specific spending categories, and he has to make sure that he does not exceed the allocated amount for any of the categories.
And that’s the basis of the cash stuffing method. Pretty simple right? The reason why they call it cash stuffing is because on TikTok, this method is done by stuffing their cash into labeled envelopes.
Benefits of cash stuffing
- Easier to keep track
Using cash allows you to properly see and visualise just how much cash you have, which makes it easier for you to keep track of your spendings, unlike digital payments.
- Challenging and fun
One of the biggest obstacles of financial management is the stigma that most people believe that financial management is boring and meticulous work. However, with the cash stuffing method, you can start managing your expenses in a simple, challenging and fun manner, making financial management less of a chore.
- Reduce debt
When you use cash stuffing as your primary method of managing your finances, you also get to reduce debt as you are paying for everything with cash instead of your credit card.
- Reduce compulsive spending
When you set clear limits on your spending, you get a chance to reduce your compulsive spending, as you can only spend what you have in the envelope. If there’s no more cash, you literally cannot buy anything more.
Disadvantages of cash stuffing
- Risk of crime
As you might know, there are risks associated with using cash, especially in large amounts as cash stuffing forces you to do. It can be more dangerous to keep large amounts of cash in your house, so you need to be very careful.
- Lose out on credit card and debit card rewards
Another disadvantage of using cash is that you’ll lose out on all the rewards that you can get when shopping with your debit or credit card, such as loyalty points, cashback, selected merchant’s discounts and others.
- Cash is inconvenient
And one more disadvantage of the cash stuffing method is that using cash for everything can be very inconvenient. Because of the fact that you’re paying for everything using money from your envelopes, it can be a hassle because you will have to count how much money you have left after a few payments.
Cash stuffing can work, if it’s right for you
If all this sounds familiar, it’s because cash stuffing is just the newest branding for the envelope budgeting method. This budgeting strategy has existed for a very long time, and is now being updated for the younger generation. Needless to say, there might be something to it if it has been around for this long.
So after considering all these factors, should you try cash stuffing? Well if you believe that it’s right for you and the way you manage your money, then it’s worth a shot. Our suggestion would be to try using it for a few months and see how you feel about it.
