What is cash stuffing?

In its most basic form, your money is literally “stuffed” into dedicated categories of envelopes and binders. So, for example, this could be for different bills, debts or a holiday fund. It is a visual way of seeing what you have financially.

Cash stuffing, whether with physical cash or via digital budgeting tools, is intended to simplify saving and spending, and is an easily accessible option for everyone.

Why has cash stuffing become popular recently?

It’s not a particularly new thing, previously being known as “envelope stuffing”. But social media has made it more popular during the cost of living crisis and, as with many “new things”, it has become popular and people have jumped on the bandwagon.

Although it is widely talked about, we cannot be sure how many are actually using cash stuffing in their own lives.

What are the benefits of cash stuffing?

Some people find dealing with cash easier to plan and budget. For those who struggle with impulsive spending, or who worry about developing a credit card debt, cash stuffing can provide control and help with planning and budgeting.

What are the downsides and risks of cash stuffing?

Cash doesn’t have the same protections as credit and debit cards when you spend it. See How to claim refunds using credit and debit cards, Consumer Credit Act 1974

Carrying cash can cause stress and anxiety about theft or loss, as can leaving large amounts of cash sitting in your home.

An increasing number of retailers are not accepting cash (aside from the fact that last week and the IT outage. showed us the importance of keeping cash in society!), so limits your options for spending, particularly online.

Keeping money outside your bank account reduces the amount of interest you can accrue.

Possible risk of theft from your home.

It doesn’t build your credit score.

You could lose out on opportunities that come from shopping online, such as cashback and discounts.

Will it affect credit scores and applying for a mortgage?

It could do because there will not be any record of how you spend your money. For a mortgage, a bank will want to know how much you can save, whether you can afford the monthly payments and will want to examine your expenditure. So, if you are taking large chunks out and they can’t see what you are using it for, you potentially become a higher risk.

What are the digital alternatives?

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

Many existing online bank accounts already allow the creation of sub-accounts, known as “savings pots” or “jam jars”, each of which can be labelled and used for a different purpose.

For example, Starling Bank has a digital cash envelope system called “Spaces”. Here, you can put money aside for different expenditures, topping up each month. I use it for my business to regularly put money away for tax bills.

Monzo, Revolut and Chase similarly provide detailed digital budgeting.

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

How do you get started with “cash stuffing” either digitally or using cash?

• List all your main expenditures and create those as categories. Make a note of how much you need for each.
• Look at other categories that aren’t essential. Be careful not to create too many categories or you will make the system more complicated than it needs to be.
• Decide whether you want to do it with cash or digitally. If digitally, look out for what your current bank provides or research offers on opening or switching accounts.
• Once everything is set up, follow your spending, checking into your system regularly to ensure that you are keeping in line with each category.

Talking cash stuffing on You and Yours 31/07/24

start at 35:53

https://www.bbc.co.uk/sounds/play/m0021j9m