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

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

Have you heard about the “money stuffing” trend that TikTok has taken?

A recent study found that “cash stuffing,” where you put dollar bills in 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 people use it regularly to manage money, build savings and pay off debt.

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And it warms my heart.

As a personal finance expert and parent myself, I know how using money can encourage more financial discipline than credit. I practiced this technique in early adulthood and only spent what was in my wallet. Since money has real physical limits, I didn’t spend that much. It helped me eliminate thousands of dollars in credit card debt within a year.

A 2021 MIT study found that parting with cash at the register causes a higher level of “pain” than touching your credit card. That’s actually a good thing. While credit cards have an intangible, “deal with it later” quality, when we use the almighty dollar, we’re only paying what we can afford, which can improve our options. stick to the budget.

But in our hyper-online world, where digital payments are commonplace, and nearly half of consumers are using mobile wallets like Apple Pay and Venmo to make transactions, what does it take to successfully execute a cash-only strategy? Is it feasible?

A So Money podcast listener and newsletter subscriber, Ricky, recently asked: I’m having trouble sticking to my budget and would like to start top-up with cash… How can I implement an all-cash budget if I have a credit card balance to pay?

I’ve got some best practices (and pitfalls) for Ricky and those looking to “cash” their way to savings.

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1. Develop a realistic strategy

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

Cash top-ups work best for month-to-month variable expenses, such as food, gas, or household supplies, where you can personally control your spending better.

Once you know what bills and payments you’ll be using your cash for, make a plan. Understanding why and how cash flow can enable your goals save more money or spending more consciously is an important first step to success.

For example, if your hope is to save a certain amount each month, that means putting that amount into a self-labeled envelope each time you pay (and keeping that envelope out of sight).

Or if you want to leverage cash to better manage your spending, you can set aside a limited amount of money each month for things like groceries and fuel, and then use the rest to pay off a portion of your debt each month.

In Ricky’s case, you can technically be cash-only when it comes to budget paying off credit card debt. You can pay your credit card balances monthly at the issuer’s physical branch or ATM, or pay virtually from a checking or savings account.

2. Calculate how much money you need each month

While this requires some tracking, knowing how much cash you’ll need on hand is key. 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 direct that amount to that appropriate envelope.

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Keep in mind that unlike variable expenses, many fixed monthly expenses, such as rent or mortgages, credit card balances, loans, or Netflix accounts, often require some form of online payment.

Pro tip: Keep 10% of each paycheck in a “savings” envelope to make sure you end the month with a little extra.

3. Leave credit

A big reason people choose to use cash is to rely less on credit cards to pay for expenses. And like the Federal Reserve interest rates continue to rise to try to keep inflation down, it’s a good idea destruction of debt payment balances sooner rather than later

While top-up can limit the temptation to overspend in brick-and-mortar stores, it can’t stop you from overspending online. So if you need to pay for something digitally that would otherwise be out of your cash replenishment system, be sure to review your plan and reconcile the expense.

Also, consider removing credit card numbers stored on your phone or on websites, which make it too easy to buy on a whim. Having to enter card information before making a purchase takes extra time and effort, which can help reduce the temptation to spend.

4. Plan to spend more time shopping

When I think about how an all-cash budget would affect my day-to-day life, I find it uncomfortable on many levels. First, I imagine going to an ATM to withdraw money. Then, if the cash strategy is to spend, I consider showing up to a grocery store, which takes more time than ordering groceries online and paying with a credit card.

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A cash-only payment system means more travel and a shift away from the instant shopping model that 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. Save your receipts

Having a paper trail of your cash purchases is important, especially for large cards that you want to return or keep as proof of purchase. Cash transactions are not tracked online like credit purchases. Always receive a receipt in print, email or text after a purchase.

6. Know that you are making a trade-off

Paying cash can help you cut down on overspending and build savings while taking a big 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 wouldn’t get if you paid with cash. You don’t even earn interest on your savings. And if you lose your money, there is no way to get it back.

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 way can prevent you from building a strong credit scoreand this is essential if you want to buy a house, rent a car or move to a new apartment.

For more money tips, check out TikTok Money Tips You Should Always Avoid. Find some ways to save more money our favorite saving challengesand learn what you have done You can’t pay off your credit card This month

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