Virtual Cash Stuffing
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| Aren't these fun budgeting envelopes? Photo Pexels.com |
A new to me term, but for an old concept, is Cash Stuffing, basically the envelope method of budgeting. I've tried it in the past, but the disadvantages for me outweigh the benefits. I don"t want hundreds and hundreds of cash sitting in envelopes. I want to both earn the interest, even if just a few dollars, by keeping cash in my HYSA until needed and get credit card rewards for groceries, gas, and miscellaneous categories.
I think my money management though is sort of cash stuffing, but virtually. On the first of the month, I pay all my bills. Now, most are on automatic payment sometime later in the month, but I enter them all in my checkbook on day one. For expenses I put on credit card, I check the account frequently and use the feature that will seperate your spending by category. It's not perfect, particularly since I pick up different items in differently categorized businesses, but overall I stay on track.
It's not as disciplined as cash envelopes, so of course easier to slip in more spending beyond my budget (eating out, I'm talking to you.) If things were dire, or if I had to save a certain amount by a certain date and had no fall back funds, this would be problematic. For me, its not as I find overspending in one area pushes me to tighten up in a category that matters less to me, like my clothing budget or HH and grocery. I might eat more humbly perhaps for a week or two and really use up lingering food and HH supplies. Not that my diets extravagant, but I might skip bubbly water and Diet Coke, or a Trader Joe's stop where wants rather than needs tend to jump in my cart.
I splurged on extra beer, wine, and soda, as well as other picky bits for our weekend. I bought clothes I hadn't intended to, even if thrifted, and anticipate a third tank of gas will be needed. I have two birthday celebrations out yet this month, and gifts to buy, not to mention treats for handing out on Halloween. There's a big dental deductible. To leverage all this extra, I'm sort of self imposing that tightening for the remainder of October in other lines. I'll fully utilize food that keeps getting overlooked ( though will need very soft stuff for a few weeks), with high risk of being tossed, use the miscellaneous beverages as entertainment contributions, fully take advantage of my free streaming services for entertainment with no optional add ons. In short, I'm taking money from these envelopes to pad a different envelope.
Have you heard the Cash Stuffing term before? Is anyone out there using the system and how does it help you?
We didn't have much money when we were first married so put money away in labelled jars in the cupboard. It worked well.
ReplyDeleteSame here after our son was born and hysband changed to a lowerpaying but more career aligned job, little spare income. We targeted a minimum amount to deposit into savings. Used cash and checks, no credit card at all, and when funds were gone, they were gone.
DeleteLike Sue, I had jam jars for non- negotiable bills; £5 each for gas, electricity, council rates, loan repayments. The £12 or so left over from the weekly pay packet etc went £10 to me for housekeeping, and the leftover change for other expenses. Cash stuffing kept us debt free!
ReplyDeleteI nirice the UK seems to do more weekly budgeting whereas we tend to plan monthly. Just an observation, but might be wrong. Can you imagine £10 for all expenses today?
DeleteI use cash but, to be honest, I find tracking my spending easier when I use a card. Maybe when I was younger cash suited better but no longer.
ReplyDeleteI was definitely cash based in college as my gas and spending, gricerues, etc. was from Sunday tip money from waitressing.
DeleteI do actual cash stuffing - and my kids laugh at me because I have a Swiss bank account (not that I'm rich, just that my pension is paid in Swiss francs). It works wonderfully for me because I would find it too easy to just swipe a card. You can get those lovely wallets with different "pockets" in too. I probably use this system because I saw my parents do it when dad was paid weekly in cash and they were very good with very little money. I had my son on this system when he lived with me for nine months after his divorce and he did well on it. That is, until he went back out on his own and dropped the system. Last Christmas I gave him a tin with a bunch of envelopes in it and a budget on paper. He laughed but not sure he took the hint! Also, having cash on hand sure is great when electronic systems go down!
ReplyDeleteI do keep about $700-$1,000 in cash at any given time, just in case for the same reasons. It's just not how I manage money. My youngest, whike she doesnt have expensive tastes, she us a sniper. She also though tries to save. It's a odd juxtaposition.
DeleteI've never done cash stuffing. I use debit and credit cards. I keep a monthly budget spreadsheet, but only major bills (phone, electric, etc,,) and planned saving are listed separately. Grocery, day to day spending, entertainment, clothes, etc, are all in one category I call Life. It doesn't matter to me how I spend it, I just can't go over for this as a whole. It seems to work for me, but I'm pretty disciplined with money.
ReplyDeleteI like the category called, Life. If it works for you, keep on. I just need to tighten a bit to the end of the year.
DeleteMy sister's husband pushed her to do it. Their CC debt was approaching out of control so there was a serious sitdown at their table. She reluctantly agreed and it reigned her in by making her deeply think about every penny. This was about 20?? years ago. They dug their way out and by 50yo were doing great and continue with the good habits learned.
ReplyDeleteBack in 1999, we switched to a cash slush fund. X dollars go into the drawer the 1st of the month for "whatever" spending by either of us. Retirement funds first, bills paid second, and the cash. When it's gone it's gone-no questions asked. Over the years, with raises, that has grown. What really makes me laugh? Now that we can afford to eat out several times a week, we both prefer home cooked meals 🤣🤣 It was always the eating out that stacked up debt!
Hence my inner discussions with "eating out".I too so prefer the taste of home cooking but I think friends, family, just try and get me out of the house when they worry I get too insular and meeting for a meal is easy time wise. Well done to your sister and husband. It's not easy changing habits that are harmful to our well being.
DeleteI have never used the envelope stuffing. I used to write checks and now I keep on hand cash for most purchases. If something bigger I will charge (to get points) and pay off at the end of the month. I have no debit card and don't want one. Pretty much a cash person here.
ReplyDeleteI use debit card more because I dont like to carry a lot of cash and debit often has no upcharge like cc do. I suppose I could carry my checkbook again for payment at the time of service, nut now there's places that dont take personal checks.
DeleteI'm a big credit card optimizer for points, and don't typically keep any cash on hand. But, I do track every credit card purchase in a spreadsheet, so I know where the money is going. - Hawaii Planner
ReplyDeleteIm getting much better at not having surprises or forgotten items when my statement ends. I really like the $20-$25 in rewards just for my basic spending not to mention the big items.
DeleteI've never done it but it seems like a very sensible option! x
ReplyDeleteSo many things are cashless though. I can sure see how it might help in so.e categories like entertainment or my eating out too frequently.
DeleteIf a person has problems with budgeting I believe that the envelopes are a wonderful way to learn. Once an envelope is empty that is it.
ReplyDeleteI am like you bills are paid on certain days (usually the 15th and during the final week of the month). My credit card is used for the cash back and is always paid off monthly.
God bless.
I like that reassurance that whats left in chevking is there for the remainder of the month. This includes my transfers to my sinking fund accounts in my HYSA
DeleteI tried the cash stuffing once. It didn't really work for me. I do a similar thing with small categories online with my bank account. I have several sub accounts that have automatic transfers each pay period. I only started it this year and it's nice - especially for holidays and gifts!
ReplyDeleteI like the cash categories for my sinking funds and cash for entertainment, but need better discipline there.
DeleteI have not done the cash stuffing method ever. One reason in earlier years was there was no money to stuff!!! I had some periods of my life where after paying the "have-tos,`I would have something like $33 left over until next paycheck! I do keep a notebook that I use as my "checkbook register"--everything I do in real time (bills, groceries, etc.) I mark in that; and on the rare occasions I use a credit card (which I make a point of paying off each WEEK), those too go into the register as purchases, so I know that they are covered.
ReplyDeleteMy college days were so financially stretched, I counted on my meal as a server ( or the help if my mom's pantry) to eat properly. I could only afford the lowest, 7 meals a week food plan, so carefully managed food in my room. In the off ca.pus housing, zi sure ate a lit if Mac and cheese and eggs.
DeleteBack in the day we used a cash system for Groceries, and our Personal Weekly Allowances. Once credit card points came along, however, we stopped using cash. Currently, and for the last 15 years, I keep a detailed budget spreadsheet online. About every couple of months, I assess how we are doing, and if it seems to make sense, will move monies around between category buckets. As one example of how this works in real time, last week I could see our Entertainment bucket was unlikely to get used up by year end, so I moved some of it's allocated funds over to Travel.
ReplyDeleteAlways a win to mive under used funds to travel. Ive got ideas and plans for some low cost/ high value entertainment activities through years end, so whats saved can both help this expensive period or treat me to more spending money on vacation.
DeleteOk I've been wanting to recommend this to you for so long. I set my daughter up with a bank that has an app that does exactly what you're talking about. They call it pockets but I set it up so that all of her pockets get filled each week from her paycheck and then she spends from those pockets just with their credit card. So for example if she's buying groceries she clicks on the grocery pocket so she sees exactly how much is in there and then she pays for the groceries with the credit card and she can immediately see that coming out of the pocket so if she spends $25 on groceries now her groceries pocket goes down by $25 it's been so great for her. The name of the bank / app is called crew also it has a really great interest rate so she's earning interest on all of the money in that bank account it sounds like I'm an advertiser I swear I'm not I'm just somebody who really loves this method and this really works for my daughter
ReplyDeleteSo the above comment is by me my name is Tina and I did it voice to text that's why it's all run on like that.
ReplyDeleteSorry I don't think I explained it very well they do have a credit card but actually she uses the debit card. And I set up the pockets myself so she has a pockets for rent gas groceries clothes vacation dog food...tons of pockets that I set up for her. And then I set it up so that each week her paycheck gets divvied up among all those pockets automatically. So then anytime she wants to buy anything she has to open up that pocket by swiping it. So she knows how much she has to spend and then immediately after she makes the payment it shows up immediately in the app so you don't have to do any tracking after it all just stays in sync
ReplyDeleteSorry last comment! Here is the website: https://www.trycrew.com/
ReplyDeleteI can see it woukd be very useful way to manage. I like that theres interest earning and the pocket discipline.
DeleteKathy from Lendery here. Your virtual version of cash stuffing makes a lot of sense: "I want to both earn the interest, even if just a few dollars, by keeping cash in my HYSA until needed". Entering every bill on day one is a simple way to see the month clearly. That same clarity matters when comparing any borrowing, which is why lendery.com shows rate, monthly payment and total cost side by side after one roughly 3-minute application, with no obligation. Thanks for a practical post!
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