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As we creep up on the end of the month, I wanted to think about different savings tricks and methods. One that I've noticed has become pretty popular over the last couple years is cash stuffing.
For those who don't know, the idea behind this is that you withdraw an amount of funds as cash and bring it home, then divide that cash into different envelopes or folders for different things you might be saving/budgeting for.
This might also be called envelope budgeting or "the envelope system".
For cash stuffing, all you need is cash and some envelopes. On each envelope, you write down a specific goal or category. Common ones are:
Clothes Shopping
Vacation
Take Out
Hobby Supplies
Fun
Keep in mind that you can use cash stuffing just for savings goals, OR you can use it for your entire budget system, including rent, bills, groceries, etc. Just remember that this is meant to help you, so if it's easier for you to pay your bills through debit/credit, make sure to leave enough money in your account for those things.
This is an example of a commercial budget binder than uses labels and envelopes (although the "envelopes" in this case are plastic sleeves rather than actual envelopes).
And here is an envelope set from Clever Fox, a planning brand that I'm very fond of. The envelopes in this listing have spots for you to not only name the category, but also track your budgeted (planned) and actual funds used for that category each month.
While the cash stuffing method is trendy right now, it's not new, and there's actually a fair bit of psychology behind it.
Neurodivergence
Some people struggle with budgeting for different reasons, but a common issue, especially for those of us with neurodivergent minds, is that the money in our bank accounts is too abstract. We see the number in the account and we know what it means, but for some people there's still a disconnect in the mind about how much money is actually available to spend.
Using a cash method when feasible allows people who struggle with digital money to hold their funds in their hands, and completes that connection of "this is what I have" to "this is what I can spend". Dividing that physical cash into clear categories, labeled and separated, also helps with that connection.
Age
A cash method for spending/budgeting is also a great way to teach your children about money. Many people might mock parents who give their kids "allowances" and "charge them rent", but in many cases these parents have just set up a system that works for them and their kids to teach the children how spending works.
Personally, I think it's a really good idea. Starting your kids early with something low stakes like a $20 monthly allowance and, say, $3-5 "rent" shows them how to budget long before they have to face that concept in the real world.
Plus, kids love to do things that they see their parents doing - that's why children love kitchen sets and toy grocery stores so much!
Family
My last major reason for suggesting the cash stuffing method is that it's a good way to get the whole family on the same page if you share funds. How you determine "whose money is whose" is your business, of course, but if you have a family fund, using the envelope method can help identify clear boundaries and limitations on spending. You can also use this as a family activity - every week, two weeks, or month, the family all sits down together to work out the budget.
Whatever reason you might have to try this budgeting method, if it works for you, let us know! And if it doesn't, let us know that too, and why!
Being an adult means being real with yourself about your finances.
A huge pain point in my marriage has been money (which is totally common in relationships). We bought an old house and have had to replace literally everything except the dishwasher, dryer and most of the plumbing. We had to have half the house rewired before we moved in because it only had 1 owner and had cloth wiring. The plumbing is galvanized steel and some of it was connected to copper (big no no: there's a chemical reaction that happens and causes leaks). We recently had to have our entire kitchen drain replaced for this and the plumber wouldn't reinstall the dishwasher until we had it checked for mold, another $600 on top of the $4000+ we already paid for the drain. We had mold behind some wood paneling that obviously couldn't be seen on inspection. New roof, furnace, AC. Our drain tile system was put in backwards and had to be replaced. There was a huge flood last summer and we had 8" of water in our basement.
Needless to say, it's been stressful and we haven't even been here 2 years. And expensive.
I have always been terrible with money. I never saw good spending habits growing up, so I've always had the mindset of "I can buy it now with my credit card. It's fine." I know, that's not fine. But that's what I've always done. Some of it was definitely out of survival during my post graduating during a recession life, but I never really stopped when I started making decent money.
Anyway, during the pandemic, I found this bank called Simple that has the envelope budgeting system built right in. It was fantastic! I paid down my debts, I brought up my credit score. I was able to refinance my car loan to nearly a 10% lower rate. It was fantastic. Then, it shut down.
There was another bank that was similar to it called Envel. Basically the same concept. And it continued to work for me, but like Simple, they shut down.
I finally moved to Ally because they have these new "spending buckets." They sounded exactly like what I had with Simple and Envel. Except they weren't. Simple and Envel would distribute your money every time you got paid and put the right amount in each "envelope." Ally just puts the money in like a day or 2 before the due date you put on the bucket. This is not helpful. Yes, I could go through and distribute my money, but I don't always remember to do it. So... I didn't really do it.
Things got out of control again. I'm not saving anything. I buying shit that I don't need to be buying. We have things that are coming due with the house (the AC is the big one). It's not good. And my spouse is really stressed about it. And I'm just really embarrassed.
So I'm filling out a chart with my credit cards and their balances, interest rates and minimum payments in addition to a personal budget worksheet and meeting with my financial advisor soon. Yes, I have one of those. A friend sung his praises on Facebook, so I thought it might be helpful. And it was. I mean, he did get me to buy a bunch of life insurance, but I can meet with him whenever to look over things. I also love that he's about my age and while he's a straight cis white guy, he works with people and couples of all types (the friend who mentioned on FB him is a lesbian and married). We met with him before we decided to buy the house to see if we could swing it.
I did find a budgeting app made by a former Simple user which is basically the same as the bank, so I think that's going to work, but I really need to just sit down with someone who's not going to judge me and take a look at everything so I can get things back on track. It's really hard to admit defeat. It's really embarrassing to not be able to tell your spouse that your personal finances are in trouble and you don't know what to do. But I'm gonna talk to Brett and he's going to help me figure it out. And it's gonna be ok.
My thoughts on envelope budgeting or cash stuffing so far.
Hello everyone,
March 1st, I started with cash stuffing. My intentions were to see whether I get better at managing my Money or not.
Thinks I hoped for would happen:
1. less shopping online
2. having cash for emergencies at Home
Cash stuffing, also known as envelope budgeting, is a method that involves withdrawing a specific amount of cash from your bank account and allocating it into separate…
Why does every awesome bank with built in envelope budgeting close down? First Simple, now Envel.
I'm so pissed. Simple helped me get my finances under control and they sold to BBVA, who sold to PNC. Now Envel is straight up closing.
— Coley (she/her) bisexual glitter explosions💗💜💙✨ (@raspberrychucks)
Jun 9, 2023
June 09, 2023 at 03:30PM
via Twitter https://twitter.com/raspberrychucks
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