Cash stuffing has fast become a viral TikTok trend, amassing a reach of almost a billion money-conscious fans. In essence, this budgeting technique involves allocating specific amounts of cash that you can spend each month on different expense categories like groceries, entertainment and petrol, for example, and then stuffing the allotted cash into labelled envelopes earmarked for those specific categories. It’s essentially a fixed budget in an envelope.
While an empty envelope is a surefire way to avoid overspending, is cash really king?
According to Tyrone Lowther, Head of Budget Insurance: “Yes and no. While this hands-on approach to saving money does have its advantages, like enabling you to physically see the cash you spend and curbing reckless spending, it should be done with caution, especially in South Africa where keeping large sums of cash is generally not a good idea.”
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Before you dismiss the idea of cash stuffing completely, remember that taking control of your finances by budgeting is about balance – so, cash stuffing, in combination with other actions.
These actions include setting a realistic goal for your budget, taking advantage of discounts and specials, making the most of rewards programmes and starting or boosting your emergency fund. Taking all of this into consideration, take a look at these cash stuffing tips specifically designed for South Africans:
- Combine with other budgeting techniques: since it’s not advisable to keep large sums of cash with you, consider using this technique only for certain expenses, whilst applying other pro budgeting tips to manage the others and save some cash.
- Don’t shout about it on social media: as much as this is a social media trend, you don’t want the world, and opportunistic criminals, to know that you’re keeping large sums of cash with you.
- Invest in a safe and store your cash subtly: keep your envelopes in a good quality safe, installed by professionals. It’s also a good idea to ensure you have home contents insurance, which provides cover for money locked in a secure safe.
- Don’t flash your cash: if you’re using cash to buy groceries, don’t take the whole month’s stash with you. Look at your list before you head to the shop, and work out just how much you need. This will also help avoid throwing non-essentials into your trolley, especially in the impulse aisle, as you wait to pay. All those little extras really do add up. The same goes for petrol as you know the average amount it costs to fill your tank.
- Focus on areas where you tend to overspend: It’s easy to go over budget when it comes to things like entertainment and clothes shopping. Decide what you can comfortably afford for these. So, if you do splurge a little at the start of the month, be realistic and build that into your allocation. Remember that you’ll need to cut down for the remainder of the month. This will also help you plan better for months ahead so that you can still enjoy yourself throughout the month, within budget.
- Remember that you’ll lose out on some interest: If you keep all your money in an online bank account, you gain some interest. The portion you choose to withdraw as cash, which sits in a safe, obviously earns none. But if it helps you avoid overspending, then what you lose in interest, you gain in avoiding unnecessary debt.
- Don’t draw it all at once: If you’re considering cash stuffing, and decide you want to use R10 000 for example, rather withdraw it over a few days so that you are not at risk of carrying around such a large amount of money. Also take special care at ATMs and banks, where criminals are always on the prowl. Once you’ve withdrawn the total, separate it according to your chosen categories, and keep the envelopes in a secure safe.
- Don’t forget the savings/emergency fund envelope: Saving for a rainy day, and building that into your budget, committing to saving a set amount each month, could come in very handy. A good rule of thumb is to build up a reserve that can sustain you for at least three months, should you lose your income.
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