Cash stuffing is making a major comeback, with young people in Ireland embracing this old-school budgeting trend to regain control of their spending in a world of instant transactions.
In a world where money disappears with a click, cash stuffing involves dividing physical cash into labelled envelopes or budgeting binders for specific expenses. This method has exploded onto social media platforms like TikTok and Instagram, with many users sharing their own experiences and tips on how to get started.
So what are the benefits of cash stuffing? For many, it's a simple yet effective way to put real limits on spending. "The golden rule?" explains Nick Charalambous, Managing Director of financial advisory firm Alpha Wealth. "Once the money in an envelope is gone, you stop spending in that category until the next budgeting cycle."
By using cash stuffing, individuals can avoid overspending and stay in control of their finances. It's a safeguard against impulse buys and unexpected expenses. "When the money is gone, it’s gone," says Charalambous. No overdrafts. No unexpected bills.
So who can benefit from cash stuffing? Anyone who has a hard time controlling their spending, has a lot of debt, or frequently finds themselves buying things on impulse can benefit from this method.
"Cash stuffing is best for those who have trouble controlling their spending," says Charalambous. "It offers structure and control, which can be especially helpful in today's digital world."
However, like any budgeting method, cash stuffing has its drawbacks. It may not be ideal for those with a lot of debt or frequent unexpected expenses.
"If an unexpected expense comes up, you might find yourself short in one category and unable to reallocate funds easily," warns Charalambous. "It's also an old-school method that doesn't always align with the way we shop and pay for things today."
Is cash stuffing the same as the old-school envelope system? Pretty much," says Charalambous. "It mirrors the traditional 'envelope system' many households used long before contactless payments and budgeting apps."
Social media is having a significant impact on how people, especially younger generations, approach their finances. Platforms like TikTok and Instagram have become go-to sources for financial tips and trends.
The rise of cash stuffing is a perfect example. It has gained massive traction online, amassing over 3 billion views collectively on TikTok alone. Rather than turning to traditional financial institutions, many Gen Z and millennials are looking to relatable influencers for practical, bite-sized advice.
So how can you get started with cash stuffing? Here are some tips from Alpha Wealth:
- Categorize your expenses - groceries, rent/mortgage, utilities, socialising, etc. and total how much you've been spending in each area over the last few months.
- Set spending limits by category Decide how much cash you want to allocate to each category. If you’re hoping to save more, identify areas where you can cut back - even €10 or €20 can add up.
- Create your envelopes or budget binder Choose something that works for you, whether it's plain envelopes, colour-coded folders, or a budget binder with labelled wallet inserts.
- Withdraw your cash and stuff the envelopes Once you’ve finalised your limits, calculate the total cash you’ll need for the week or month. Withdraw that amount, sort it into piles, and stuff your envelopes accordingly.
Remember, discipline is key. When making a purchase, use the relevant envelope. If the money runs out, that’s it until the next cycle. Avoid topping up from other envelopes or reverting to your debit or credit card unless it’s absolutely necessary.
With cash stuffing, you can start small and build from there. Try just two or three categories like socialising, groceries, or fuel and see how it works for you. Over time, these small wins can help you build towards bigger goals like holidays.