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SALT LAKE CITY — These days, it is pretty hard to escape the phenomenon of cash stuffing with excited budget-minded millennials and zoomers sharing tips all across social media.
It is a trend that just keeps building with over 400 million views on TikTok alone and counting. But it is a practice that goes back generations, said certified financial planner Shane Stewart with Deseret Mutual Benefits Administrators.
"As many things that show up on TikTok, they're recycled, they come back again and are presented as new when they're really just something that we've done in the past and haven't done for quite a while," Stewart said. "Part of the draw, this cash stuffing, is having your hands on something tangible."
Basically, you stuff money into different envelopes based on the categories you want to budget for. The idea is that the physical cash helps you visualize what you're spending: making it easier to take control and not overspend.
"You can use it for categories that you feel like you're spending too much or don't have a lot of control," Stewart said. "You could decide on a certain amount that you would spend each month, take that put it in an envelope and then use that until the money's gone. It does come with some limitations and some problems, but I recommend it for people who are really having a struggle in a certain category."
Stewart believes cash stuffing is more practical for variable expenses like gas, entertainment and dining out. But people may find it harder to do with fixed costs like mortgages, rents, and car payments. For one thing, many of those are paid online these days. Plus, paying cash means frequent runs to the bank or a free ATM.
"If you add extra steps, you're adding friction as we call it in the behavioral finance world, you're adding friction or pinch points that could go wrong," he said.
Two more pinch points: You will not earn any interest while keeping cash in envelopes and it is risky — not just because of theft but imagine losing an envelope stuffed with $500. If you cannot find it after tearing the house apart, it might be gone forever. Still, Stewart said setting a budget for yourself is always a good idea.
"If you're not doing it and this is a way you feel like you will do it, I'm a big proponent of whatever works for you," he said.
