NerdWallet: The problems with cash-stuffing

by | Aug 10, 2023 | Stock Market

This article is reprinted by permission from NerdWallet.  When Giovanna “Gigi” Gonzalez wanted to cut back on her food spending, the finance expert and money coach applied what is known as the “cash-stuffing” method of budgeting. She put the cash she allotted to food for the week into an envelope and limited her spending to that amount.

“I could see when I had just 20 bucks left for the week, so it was really helpful,” she says. Popularized through TikTok videos, cash stuffing has brought back the old-fashioned envelope system of budgeting: You divide up your cash into different envelopes, each dedicated to a category of spending or saving. “It’s a tried and true method,” says Gonzalez, who also founded The First Gen Mentor, a money course where she promotes financial literacy. If you’re considering joining the cash-stuffing movement yourself, here are some guideposts:Set aside planning time Cash stuffing requires an upfront time commitment because you need to plan your spending, withdraw your cash and then “stuff” it into labeled envelopes. That process could easily take an hour or two to get prepared for the week ahead. “It’s an additional time commitment,” Gonzalez acknowledges, but the upside is that “you immediately feel more in control of your money.” Check out: These are the biggest lottery prizes in U.S. history.Keep your cash safe With so much cash on hand, it’s important to secure it, says Bruce McClary, senior vice president of membership and communications at the National Foundation for Credit Counseling. “There are all kinds of risks involved if you’re stuffing cash in places where you might forget it or heaven forbid something happens and the cash burns,” he says. Tim Melia, a certified financial planner and founder at Embolden Financial Planning in Seattle, suggests keeping the cash envelopes in a fireproof safe that locks. He adds that while news about bank collapses likely contributed to the appeal of cash, an FDIC-insured bank account is still the sa …

Article Attribution | Read More at Article Source

Share This