Cash stuffing is the latest budgeting hack helping thousands of people through the cost of living crisis. Hundreds of influencers across TikTok and Instagram are turning to this method to help with rising bills, paying off debt and saving for big events.
With Christmas only 152 days away, some families will be looking to save already so that they're prepared for the holiday season. Others will be trying to prepare in advance as energy bills look set to rise again come October.
But what actually is cash stuffing? And could it be the method to help you reach your savings goals?
What is cash stuffing?
Cash stuffing is a pretty simple method of budgeting your cash. You use envelopes divided into categories and allot a certain amount of cash each month.
The idea is that you are able to see where your cash goes more clearly and it helps you gain a better understanding of your outgoings. The great thing about cash stuffing and budgeting is that it suits everyone, all lifestyles and budgets.
How to get started in cash stuffing?
Danielle Rose, known as The Budgeting Bear online, says that getting started with cash stuffing is the easiest thing. “You really only need a notepad, calculator, pen and envelopes,” she says.
“Your envelopes don’t need to be anything more than envelopes you would post a regular letter in. This was how I started my budgeting journey initially and it worked just fine!” says Danielle.
Each month you take your income out of the bank as cash. Then you divide it into different envelopes, this could include your monthly utility bills, rent payments, grocery bill, water bill or car insurance.
The cash you have left over after your bills can be “stuffed” into what the online budgeting community call “sinking funds”. Sinking funds are a way to save money for specific purchases or events, such as Christmas, holidays or your annual car insurance bill.
The idea is you divide the fund goal amount by the number of pay dates before payment is due and this is the amount you add to your envelopes to save each month, says Danielle. It can be used for birthdays, Christmas or holidays.
How much can you save with cash stuffing?
It is possible to save large amounts of money for big occasions. Cash stuffing allows you to see where all of your money goes, as you realise how much cash you spend on the likes of subscriptions or takeaways.
Danielle said: “I recently paid £1,000 for a holiday in cash that I had saved using this method, this is the first holiday I haven’t had to pay for on credit. Planning for such events in advance means you can save for them gradually and save for multiple [things] at the same time.”
“It gives you a sense of freedom and control over your money,” Danielle said. “I feel like I have had a pay increase. In reality, I haven’t - I am just budgeting my income efficiently.”
Popular TikTok user She's On A Budget regularly documents her budgeting techniques, including how she is currently challenging herself to save £30,000 for a house deposit. Yasmine Camilla, another social media budgeter who is a fan of the cash stuffing method, has shared her journey to financial freedom and how she has cleared £38,000 of debt.
Top tips for cash stuffing starters?
Danielle offers her top tips for those looking to get started on their cash stuffing journey.
- Don’t compare yourself to others as no two budgets are the same. Get involved with the community on TikTok and Instagram for support and help but remember that everything is individual.
- Be honest! It’s easy to pretend that you didn’t buy something by not writing it down, but in the long run, you won’t be fully aware of where your money is going to get control over it.
- Make your budget realistic. There’s no point in setting a low budget for a particular category that you know you’ll spend twice as much on.
- Revisit your budget every pay day. Compare how much you spent the month before with how much you budgeted for and adjust your next budget to match. For example, if you budgeted £10 for hair and beauty but spent £20, budget more for next month. That way, you’ll end up with money left over that you can add to a savings pot.
- Allow yourself fun money. A lot of people turn to the cash stuffing method to help with repaying debts or huge saving goals, but depriving yourself of some relaxing you time isn’t sustainable in the long run, so set aside some cash to go for a meal or for drinks with friends.
Digital cash stuffing
If handling physical cash isn’t your style and you prefer to manage things digitally, there are options available. Digital banks Monzo and Starling both have the option to create digital envelopes.
You can set goals, lock and unlock pots, and pay bills directly from pots. You can also create automatic payments and you can choose to round up payments
You can sign up for Monzo or Starling to start saving digitally. Or visit Danielle's Etsy shop for physical binders and envelopes.
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