At a Glance
If you haven’t already seen our guide to cash stuffing, make sure you start there. In this article, we will take a deeper dive into the trend that has taken over the personal finance side of TikTok and explain exactly how you can implement the practice in your life.
Materials and where to buy them
What you use for this system is really up to you and depends on your style. You can find the basics at any retailer like Amazon, Walmart, or Target. We love supporting small businesses, so we recommend finding materials on Etsy or from local vendors in your city. A big benefit of shopping small is that they often allow for personalization. You will want to find a budget binder that is large enough to fit cash and has labels to write your categories. Many of these binders will also have slots for credit cards or receipts, which is helpful for tracking expenses as well.
These binders from Etsy allow you to not only pick the color, but the font and the labels. You can choose between five to nine inserts and choose exactly what goes on each. This is a great option to stay organized and start a system that will work perfectly for you.
If you like simplicity and want to do it yourself, you can also order a budget binder from Amazon for only $8. At the most simple, you can use standard envelopes that you have laying around your house and write the category on the front and keep them on your desk.
Whatever you choose, make sure it works the best for you and your lifestyle. Some people like using clear envelopes so they can see the cash easily when stuffing, while others do not want to be tempted by the cash so they opt for white or colored envelopes.
Paying off debt is no easy feat, but it is possible. The cash stuffing system lets you monitor your spending, and if a big goal of yours is to pay off debt, it would be great to have an envelope dedicated to debt payments. MyCredello is another fantastic tool that lets you view and organize your debts. Just like planning your weekly workouts, you can plan your debt payments.
Track all of your accounts in one place so you never miss a payment, both online and in the app. You do not need any special equipment, just sign up and connect your accounts to start tracking your debt today. MyCredello allows you to make the plan, and the envelope stuffing system lets you put money aside to make your payments. When a payment is coming up, you can empty your envelope into your bank account and easily make your payment. Before you know it, you will be completely debt-free.
Creating your budget
The first place to start is by creating your budget. You won’t know which envelopes you need until you know how you are spending. There are a few different ways to do this, but we find that apps that track spending are one of the most helpful. Our favorite is Mint by Intuit, which automatically categorizes your spending for you.
Look at all of your spendings over the past three months. You will notice two types of spending: fixed and variable. Your fixed spending is things like rent, utilities, car payments, phone bills, etc. You will continue to pay all of those bills online, as the majority will not accept cash as payment.
Take your total net income from your paycheck, and take out your fixed expenses. The rest of the money that gets left over will be for variable expenses, like eating out, shopping, or gas. If you get paid twice a month, you only need to take out half of your fixed expenses.
For example, let’s say for round numbers that you make $1000 per paycheck and get paid twice a month. Your fixed expenses are $1000 a month. Per paycheck, you will want to keep $500 (half of your fixed expenses for the month) in your bank account. Take the other $500 out in cash to use for your variable expenses to be stuffed in envelopes.
Once you have separated your fixed versus variable expenses, you will want to categorize your variable expenses so you can properly label your envelopes. There is no magic solution to this, but what makes the most sense for you.
Some examples can be:
- Eating out/bars
- Debt payment
Stuffing your envelopes
You have your materials and your categories – now is the fun part: stuffing! Once you know how much money you have to allocate to each category, you can begin putting the cash in the envelopes. This can vary from week to week, especially if you get paid hourly and your paycheck tends to vary. Some weeks, you might want to put more in a gift or vacation fund category, while others you might want to focus on eating out because you know you have some fun events coming up.
How you choose to stuff your envelopes is entirely up to you and where you want to spend your money. You might notice you spend more in one category and do not spend anything in another category. For instance, if you have a category for clothing but do not buy clothing except for a couple of times a year, it does not make sense to have an envelope for that. Instead, have a miscellaneous envelope that you can pull from if you need to spend money on something that does not fall into any other category.
It is up to you when you pull money out of your envelopes and how often you stuff them. You can do it weekly, biweekly, or monthly. Trust your instincts and create a personalized system that works for you.
@rochelleadamsonbudgets Be your own bank 🏦 #cashonhand #cashstuffingbeginners #bankmoney #MyAncestryStory #cashtips ♬ original sound – Rochelle | Cash Budgeter
Benefits of the envelope system
The biggest benefit of the cash stuffing envelope system is that it makes budgeting visual. Oftentimes, using debit or credit cards can feel like you are not even spending money because you are just swiping a piece of plastic. This is how so many people get into financial trouble – they cannot see where their money is going. This system makes it so you can only spend whatever is in the envelopes. If you have run out of money in an envelope, you cannot overspend in that category. When you see exactly how much you are working with, you start to prioritize spending rather than spending impulsively.
Similarly, the system keeps you accountable. It is far too easy to overspend and rationalize it to yourself when paying for things online, but virtually impossible to do so when you are spending cash. This system is easy to use and beneficial for young people new to budgeting and experienced budgeters that are looking for new tools.
Try to avoid stealing from one envelope to put it into another. If you have to, make sure you replace that and add more to the stolen envelope the next time you stuff it.
Do not take all of the envelopes with you everywhere you go. Take money out of the envelope right before you’re about to spend it. For example, if you’re about to go to the grocery store, you can take money out of the grocery envelope and put that in your wallet. Not only can taking all of the envelopes increase your chances of getting robbed, but it can increase your chances of stealing from one envelope to pay for another.
Do not be worried if your checking account seems much lower than normal. This is because you have more cash out of it than you typically would. If you are operating fully at the cash envelope budgeting system, you will probably only have enough money in your checking account to cover fixed expenses, which is exactly how it is supposed to be. Make sure to keep a buffer in your account to prevent any overdraft fees.
Do not compare your envelope categories or how much you are putting into your envelopes to anyone. This is a highly individualized process and varies greatly depending on lifestyle and income, so do what works for you.
As you get used to the system, you will likely want to edit your categories or how much you stuff each envelope with over time. Allow yourself the flexibility to make these changes and be lenient on yourself as you are learning.
Make sure you know where your cash is at all times. It would be a shame to do all of this work just to end up losing your cash. Be careful where you put it so you avoid any greedy hands taking a few bills here and there.
View this post on Instagram
There are a lot of personal finance trends on TikTok that are inaccurate or downright harmful. However, this seems to be an exception. The only downside to this trend is that using cash means you are not collecting any points or rewards on credit cards. However, if you are new to budgeting, this is a sacrifice that is worth it to get your finances under control and track exactly how much you are spending in each category.
This trend can decrease your spending and increase your savings, which is exactly how to set yourself up for financial success long term. This trend might be something you do in the short term to get a feel for budgeting before going back online, or it can be what you use for years and years.