Cash Stuffing: Why This Viral Gen Z Trend Is Gaining Popularity

This story is part of So moneyan online community dedicated to financial empowerment and advice, led by CNET Editor at Large and So Money podcast host Farnoosh Torabi.

Have you heard about the “cash stuffing” trend that has taken TikTok by storm?

A recent study found that “cash stuffing,” where you put dollar bills into envelopes, binders, liquor bottles or just about anything, is growing in popularity among Gen Zers and millennials. The act of storing dollar bills in creative places went viral on TikTok during the spring. Researchers at Credello, a personal finance platform, found that more than half of young adults regularly use cash stuffing to manage their money, build savings and pay off debt.

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And it warms my heart.

As a personal finance expert and a parent, I know firsthand how using cash can encourage more financial discipline than credit. I practiced this technique in early adulthood, spending only what I carried in my purse. Because cash has real physical limits, I didn’t overspend that much. It helped me wipe out thousands of dollars in credit card debt in a matter of a year.

A 2021 MIT study found that parting cash at the register versus tapping your credit card elicited a higher degree of “pain”. This is actually a good thing. While credit cards have an intangible, “trade it later” quality to them, when we use the almighty dollar, we only pay for what we can afford, which can improve our odds stick to a budget.

But in our hyper-online world where digital payments are the norm, and nearly half of consumers use mobile wallets like Apple Pay and Venmo to transact, what’s involved in successfully executing a cash-only strategy? Is it feasible?

A So Money podcast listener and newsletter subscriber, Ricky, recently asked: I’m having trouble sticking to a budget and I’d like to start stopping cash… How do I implement an all cash budget if I have a credit card balance I need to pay off?

I have some best practices (and pitfalls) for Ricky and anyone looking to “cash well” their way to saving.

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1. Develop a realistic strategy

While some extreme cash handlers may try to pay for everything with dollar bills, that’s not feasible for most of us, considering how many merchants and services prefer — or even require — digital payments.

Cash top-up works best for variable month-to-month expenses, such as food, gas or household supplies, where you can exercise more control over personal spending.

Once you know what bills and payments you’ll be using your cash for, set up a plan. Understanding why and how cash stuffing enables your goals to do one of two save more money or spending more consciously is an important first step in setting yourself up for success.

For example, if your hope is to save a certain amount each month, that might mean putting that amount aside in cash each time you get paid in its own marked envelope (and putting that envelope out of sight).

Or if you want to use cash stuffing to get a better handle on spending, you can set aside a limited amount of cash each month for essentials like groceries and fuel and then use the rest to pay off a chunk of debt each month.

In Ricky’s case, you can technically be on a cash budget when pay off credit card debt. You can either pay off your credit card balances each month at the issuer’s physical branch or ATM, or pay virtually from a checking or savings account.

2. Calculate how much cash you need each month

While this requires some tracking, knowing how much cash you need on hand is crucial. I recommend reviewing past bank statements to see how much you tend to spend in each variable category, such as groceries, gas, utilities, clothing, and entertainment. From there, commit to a spending limit or savings goal and allocate that amount to that corresponding envelope.

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Note that unlike variable expenses, many fixed monthly expenses, such as rent or mortgage, credit card balances, loans, or even a Netflix account, often require some form of online payment.

Pro tip: Save 10% of each paycheck in a “savings” envelope to make sure you always finish the month with extra.

3. Loose credit

One big reason people choose to use cash is to rely less on credit cards to pay for expenses. And as the Federal Reserve continue to raise interest rates to try to curb inflation it is a good idea to collect outstanding debt balances sooner rather than later.

While top-up cash can limit the temptation to overspend in physical stores, it can’t prevent you from overspending online. So if you find yourself having to pay digitally for something that would normally come out of your cash top-up system, be sure to review your plan and reconcile the expenses.

Also, consider removing stored credit card numbers in your phone or on websites that make it too easy to buy on a whim. Entering your card information before making a purchase requires additional time and effort that can help reduce the temptation to spend.

4. Plan to spend more time shopping

When I think about how a cash budget will affect my daily routine, it feels inconvenient on several levels. First, I imagine going to an ATM to withdraw cash. Then, if the cash strategy is for spending, I think about showing up at a grocery store in person, which takes more time than ordering groceries online and paying by credit card.

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A cash-only system means making more trips and moving away from the instant purchase model many of us have become accustomed to during the pandemic. And that’s not a bad thing – it’s just something to plan for.

5. Keep your receipts

It’s important to have a paper trail of your cash purchases, especially for big-ticket items that you might want to return or just want as proof of purchase. Cash transactions are not tracked online like credit purchases. Always get a receipt printed, emailed or texted to you after a purchase.

6. Know that you are making a trade-off

Paying in cash can help you limit your overspending and build up savings while taking a significant bite out of your debt. But you also give up some benefits.

For example, if you use a credit card and pay off the balance in full each month, you can earn points or rewards that you won’t earn when you pay with cash. You also do not earn interest on your savings. And if you misplace your cash, there is no way to recover it.

Some credit cards also offer purchase protection, which allows you to receive a refund or refund if the item you purchase is stolen or accidentally damaged. Unless you buy a warranty, buying cash won’t give you the same peace of mind.

Finally, deciding not to use credit cards in any form can prevent you from getting a strong credit scorewhich is crucial if you want to buy a house, rent a car or even move into a new apartment.

For more money tips, check out the TikTok Money Advice You Should Always Avoid. Find ways to save more money with some of our favorite savings challengesand learn what to do if you can’t afford to pay your credit card this month.

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