With the rise of digital wallets, online bill payment, and apps like Venmo, it has become increasingly easy to go about your day without ever needing to break a $20 bill or even take one out of your wallet. However, a surprising trend is emerging among Gen Z: according to a 2023 survey conducted by The Harris Poll for Credit Karma, 69 percent of Gen Z individuals report using more cash now than they did the year before, with 23 percent stating that they use cash for most of their purchases. Despite growing up in the age of iPhones, this generation seems to be gravitating toward cash stuffing—a trend where individuals use physical cash instead of digital payment methods.
Cash stuffing, also known as the “cash envelope system” or “envelope budgeting,” involves allocating cash into specific envelopes labeled for different spending categories like gas, dining out, shopping, entertainment, rent, and utilities. This method helps individuals control their spending by only using the cash allocated in each envelope throughout the month. While the concept has gained popularity on TikTok, the idea behind it is not new.
There are advantages to cash stuffing, such as limiting spending by forcing individuals to stick to the cash they have on hand. The act of physically handing over cash can lead to a better understanding of spending habits and encourage more thoughtful purchasing decisions. It also helps prevent credit card debt and supports stronger financial control, especially for those who struggle with overspending on cards.
However, there are risks associated with cash stuffing. Keeping large amounts of cash on hand poses a security threat in case of loss or theft. Furthermore, using cash means missing out on the purchase protection, cash back rewards, and credit card points that credit cards offer. Cash transactions are also harder to track compared to electronic payments, which could lead to overspending if not managed properly.
If you decide to try cash stuffing, it’s important to determine your budget categories, withdraw the necessary cash for each category, allocate it into labeled envelopes, store the cash securely, and track your spending throughout the month. Alternatively, you can explore digital alternatives like loading specific amounts onto prepaid debit cards for different spending categories or using personal finance apps to help manage your budget effectively.
