Everything You Need To Know About Cash Stuffing

There are so many different ways that you can budget and save your money. And what works for each person will be totally different. I’m going to talk about cash stuffing in today’s post as it’s something I find works quite well for me.

As I sit down to write this post I’ve just come back from a two week holiday and realised how wintery the UK is feeling. The prospect of colder weather means we’ll be spending more time at home. Most of us probably won’t be able to afford to go out too often. The cost of living crisis means amenities such as heat and electricity have gone up, foods gotten way more expensive, and I feel like crying when I go to fill up my car with fuel.

So it’s important now more than ever to be clever with how your money is budgeted, and get it to work harder.

What is cash stuffing?

Cash stuffing is quite a traditional form of budgeting and saving, and it seems to be getting really popular on TikTok at the moment. But what is cash stuffing?

It involves splitting up your money when you’re paid and dividing it into different categories based on what it’s being used for. Traditionally it would be done by physically withdrawing money and stuffing the cash into different envelopes depending on the category. Although now it can be far easier to do it digitally which I’ll talk about more later in this post.

Cash stuffing generally works on an accounting concept called zero-based allocation budgeting. In simple terms this means allocating all of your money to your expenses, wants, savings and debt payments. The goal is that your income minus your expenditure equals zero by the end of the month.

How to do it?

If you want to do cash stuffing you need to figure out your categories.

First up you’ll want all your fixed expenses; so rent, energy bills, insurance policies etc. You can put each one individually, or you can group some such as ‘insurance policies’ which may include vehicle, home and life insurance.

Once you have done your fixed expenses allocate out the rest of your money based on what works for you. Beginning with a food budget for that month, then any sinking funds, debt payments, shopping money etc. Continue with this method until you’ve allocated out all of your monthly income.

Think about everything you spend including:

• Fuel and vehicle costs
• Other transport
• Entertainment such as the cinema or concert tickets
• Eating out/ takeaways
• Shopping/ buying clothes
• Saving for Christmas/ birthday presents
• Holidays

Once you have your categories and amounts as soon as you’re paid split your money out into the categories so you’re essentially left with zero. Although hopefully you’ll have a shopping/ treat fund for when you want it. Cash stuffing can be a great way to help address overspending

Cash stuffing with envelopes

Traditionally people with withdraw money and put money into the category envelopes. So when you want to spend on say a takeaway, or a night at the pub you grab the envelope relevant for that and take cash from it. If the envelope is empty you can have to decide whether to not spend, or move money from another envelope.

In time you’ll get into the habit of checking the relevant envelope before agreeing to go to the cinema, or meet a friend at the pub. Having these budgets instantly visible should help you prioritise what you want to use your money for.

For a lot of people using an app can make the money feel less real and doing it physically (even if not with all categories) can work better. But it’s what works for you. You may choose to keep bills/ debt payments in online categories, and food/ other types of spending money in physical form.

A digital version of the envelope system

I know I spend differently when I have physical cash, but for my lifestyle I find digital cash stuffing more practical. I do most of my spending online from groceries to train tickets, so having cash isn’t as easy for my lifestyle.

With banks such as Monzo you can create pots as each category or envelope. And on payday you can sort out your salary into the different pots like you would with putting cash into envelopes. You can even automate it with salary sorter.

I choose to move my money manually as our budgets and allocates can change quite often.

How we use cash stuffing in our budgets

We use cash stuffing principles for our money, but leave all fixed expenses in one account/ pot that isn’t touched by us day-to-day. This includes absolutely everything from our mortgage and water bill to our Spotify subscription and phone bills.

Then the rest of our money which comes through weekly from Luke’s income is separated using cash stuffing. As soon as the pay comes in all of it moves to various accounts and pots. These include:

• Weekly grocery money
• Weekly money for both me and Luke
• Wedding sinking fund
• Christmas sinking fund
• Fuel sinking fund
• Vehicle sinking fund (for services/ MOT/ maintenance)

These categories account for 100% of the income. Then I do a mini version of cash stuffing with my weekly money and the categories change every single week depending on what I have coming up. Some weeks it goes aside for train fares and meals out. Other times it’s putting money aside for a book shopping trip or to buy a theatre ticket.

Have you ever tried cash stuffing?

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