The cash stuffing method: what is it and does it work?

As the cost of living crisis continues in the UK, new money management tips and tricks are being trialled by people nationwide.

One of these is cash stuffing.

But what is cash stuffing, does cash stuffing work, and will it work for you? 

If you keep up with the latest social media trends, from TikTok to Instagram to Facebook, there’s every chance you’ve seen the term ‘cash stuffing’ on your feed.

People are taking money out of the bank and stuffing cash in envelopes as a new way to save and stay organised when times are tight.

It’s not a new form of budgeting, but it’s currently having another moment in the sun. 

With everything from mortgages to the price of milk being more expensive than ever, let’s explore cash stuffing for beginners and discover whether it might be helpful to you. 

What is cash stuffing?

Put simply, with a cash stuffing system you allocate monthly budgets for certain expenses and put the corresponding amounts of cash into envelopes.

Often, these envelopes will be contained within a large binder, and the required money for each purchase will be taken out of the binder as needed.

Common cash stuffing categories include: 

• Beauty and personal care 
• Car insurance 
• Car payments 

• Celebrations (birthdays, holidays, etc.) 
• Children (items for them, spending money for them, etc. — there could be many subcategories) 
• Clothing 
• Credit card payments 
• Electricity and gas 

• Entertainment and eating/drinking out 
• Food shopping 
• Fuel 
• Holidays 
• Phone bill 

• Rent/mortgage payments 
• Water 

Learn more: What is a financial plan?

What is the point of cash stuffing? 

Like any budgeting method, there are both benefits and drawbacks.

While it’s helping people to keep a close eye on their spending and saving habits, it can be easy to override the system and spend on your debit or credit card to supplement the cash budget that’s previously been set. 

The viability of cash stuffing depends on the person, and the method has pros and cons (as most money-saving methods do).

The biggest pros of cash stuffing are as follows: 

• It makes you more attentive to or deliberate about your budget for each category 

• The competitive, challenging aspect can encourage financially responsible behaviour 
• It’s a simple, cheap method to introduce into your life 
• It limits impulsive spending 
• It can restrict overspending effectively (especially if, for example, you choose to leave your card at home on a night out and only take your allocated cash with you) 

The cons, then, are as follows: 

• Cash doesn’t have the same protections as credit and debit cards 
• Carrying cash can cause anxiety about theft or loss, as can leaving large amounts of cash sitting in your home 
• Some vendors only accept card payments, limiting your options 

• Keeping money outside your bank account reduces the amount of interest you can accrue 
• Dealing with the finite nature of cash might increase stress levels in certain people 

If you’re interested in cash stuffing but don’t like the cons surrounding physical cash, why not try some digital alternatives with a similar budgeting-focused ethos but a slightly different approach? 

Digital cash stuffing alternatives

If you’re not interested in dealing with the stresses of physical cash in 2023, you might like to explore the digital versions of cash stuffing.

Plenty of apps can replicate this budgeting system or something similar, either separately from your current bank account or in place of your existing system. 

Starling Bank, for example, has a digital cash envelope system called Spaces.

Each ‘Space’ can be topped up monthly with your expected or projected budget.

There’s also a spending insights section on the Starling app that lets you look back at the last three months, monitoring whether or not you’ve met your budgets.

Other great online banking apps for detailed budgeting include Monzo, Revolut, and Chase.  

How to start cash stuffing 

Cash stuffing (whether with physical cash or via digital budgeting tools) is intended to simplify saving and spending, and it’s a proudly accessible option.

All you need to do to get started is follow these four simple steps: 

1. Create your core budgets or categories – Look at your main expenses. Separate them into categories, and note the amount you’ll need to spend on each. 
2. Set your remaining budgets and create your remaining categories – Create categories for other areas, and set budgets. Try not to introduce too many at once or you’ll confuse things unnecessarily. 
3. Get your cash stuffing system in place – Decide whether you will store cash in some kind of binder, as mentioned above, or use digital banking tools to create subaccounts for each category. 
4. Track your spending – Once everything is set up, keep a good eye on your spending. This is arguably the most challenging part, as you’ll need to check in regularly to ensure you’re keeping in line with your original budget (especially if you’re doing things digitally and limits are tougher to stick to). 

You should now better understand the basics of cash stuffing and how to get started.

If you’re feeling the pinch this year and ready to take a different financial approach, cash stuffing may be just what you need.

But if it doesn’t work for you, don’t fear — when it comes to finances, there’s no one-size-fits-all solution.

If you need help managing your financial affairs, speaking to a regulated financial adviser can help.

Click below to connect with one today.