At a Glance
What started as an app for kids to post dancing videos has turned into a powerful resource for just about anything – including finance. Gen Z has turned to the TikTok trend of “cash stuffing,” which is an old method of budgeting that involves stuffing cash into envelopes at the beginning of each month. This trend has exploded in recent months, with many thrilled that the finance community on the app is doing something positive and helpful for a change.
Gen Z budgeting made easy
@lilyrnbudgets Cash stuff with me 💸 #cashstuffing #cashenvelopes #save #budgetwithme #budget #savemoney #TopGunMode ♬ FEEL THE GROOVE – Queens Road, Fabian Graetz
Life tends to be cyclical, and apparently, budgeting is no exception. What started as a trend before debit and credit cards even became popular is now exploding on a social media app. Gen Z is embracing the technology-free way to prevent overspending and know exactly where your money is going. By putting each paycheck into separate envelopes – some for needs like rent or a phone bill, some for wants like shopping or travel, and some for savings, people get a more clear view of how much they have to spend. Although most people typically do not carry cash on them these days, this budgeting solution gives people the opportunity to see how they spend, whereas credit cards can often feel like “made up” money.
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MyCredello is a powerful tool that helps you manage your debts and create a path to becoming debt-free. This easy way to view and organize your debts allows you to plan payments just like you plan your workouts. Simply connect your accounts and start tracking them all in one place. MyCredello is a great partner to the cash stuffing system. Cash stuffing lets you see how much money you have left over in your budget once your expenses are met. With that leftover cash, you can use MyCredello to pay off debt quickly and effectively.
How TikTok has influenced a generation
Whether you like it or not, TikTok has immense power, especially with the younger generations. It’s not just for inane dances! As of January 2022, the app had over 1 billion monthly active users. A little over 60% of its users fall between 10 to 29 years old, meaning that younger generations are not only powerful but have the opportunity to be influenced by trends and ideas from fellow members of their generation.
The idea behind TikTok is to build a “global community” and the idea that joining is being a part of something bigger than themselves. These short videos allow for constant stimulation and rapidly sharing of new ideas. This can have both a positive and a negative impact on viewers. While there are plenty of “influencers” promoting body positivity and sharing helpful tips, there are just as many that are profiting off of exploiting those younger than them who do not know better.
There are many different “sides” to TikTok, which means that depending on the algorithm and what kinds of videos you engage with, you will see certain videos over others. If you are on the personal finance side of Tiktok, you likely have heard of cash stuffing. This trend is positive, but many others in the personal finance category are not. Financial influencers are typically incentivized to promote or sell products and services that they might not use themselves. They are not transparent with how much money they are making from brand deals or might show budgets with incorrect numbers. When videos are getting shown to impressionable youth, the finance side can create a monster of debt and irresponsible spending that gets masqueraded as great advice.
However, with cash stuffing, there is no brand deal or anything being sold. It is just a simple, decades-old budgeting tip that allows people to physically see how much money they have in each spending category. The trend has blown up – there are currently more than 538 million views on the cash envelope stuffing page.
Cash stuffing – what you need to know
Cash stuffing as a form of budgeting became very popular in the 1990s. Having tangible cash is not very common in the 21st century, as pretty much everything has moved online. However, allotting all of your spending categories in a binder with separate envelopes allows you to better monitor how much you have to spend in that category. First, you have your set expenses, which are things like subscriptions, rent, and phone bills. Then, you have your variable expenses, which can include things like a vacation or holiday fund, gas, eating out, groceries, or if you are saving up for something specific.
The categories can include whatever makes the most sense for your budget. How often you stuff the envelopes depends on how often you get paid. If you get paid once a week, the idea is that you stuff the envelopes once a week. If you get paid once a month, you stuff once a month. The hope is that you can prevent overspending by seeing how much you have to work within each category. If you have only allotted $50 this month to eat out, there is no more cash left once that $50 is up because it is all accounted for. Credit and debit cards do not have this accountability factor and can encourage overspending.
Cash stuffing for beginners: The math breakdown
One user on TikTok is aiming to save $10,000 in 100 days using the method. However, the average salary for a 24-year-old Gen Zer is $667 per week or $2668 per month. You have set needs, wants, and savings envelopes. Here is how the math could break down if you are stuffing weekly:
Rent: $200 (total rent $800, put $200 of each paycheck into envelope)
This example is quite simple and life is much more nuanced, but the idea is that you allow the correct amount you need for your set expenses while budgeting the rest for your variable expenses. As you do this month in and month out, you will likely notice that you have a much better idea of where you spend more and where you spend less.
Potential downsides to the cash stuffing system
The majority of people do not get paid in cash, so if you want to implement the cash stuffing system, you will need to have money directly deposited into your bank account and then withdrawn in cash to stuff the envelopes. This can be somewhat of a pain, but worth it if the system works for you.
The other downside is that your money is not working for you while it is in the envelopes. If you spend on credit cards, you can earn points to be redeemed for travel or shopping, or cash back to offset spending. Credit cards can get people into a lot of trouble if they do not get used properly, so the cash stuffing system is a great tool for financial health, but prevents you from earning incentives that cards can offer.
TikTok has a lot of power, which can be a good and a bad thing. Many trends can spread misinformation or even cause harm, so it is refreshing to see a trend that promotes healthy spending habits and gives people an alternative to having money be strictly electronic. You can always adapt a trend to best suit your needs. If you want to still put the day-to-day expenses on your credit card but use the cash stuffing system to save for vacations, birthday presents, the holidays, or a special event, then you can do so.
At the end of the day, budgeting is a very individual practice. You can learn lots of skills, but you should always do what is best for you and your finances.