Before credit cards, debit cards, and apps, people used budget envelopes to see where their money was going. Today, a variation called cash stuffing is being used by many, especially young people who became familiar with the system through online videos. This system is helping people cope with inflation and other financial difficulties by controlling their spending.

The main benefits of cash stuffing are: (1) increased spending awareness; (2) reduced credit card use to prevent debt; (3) controlled spending – once cash is gone for a budget item, you can’t spend any more – which can result in higher amounts for saving; (4) improved budgeting for holiday spending, birthday gifts, and children’s school activities; and (5) decreased stress with a greater sense of financial control.

Possible drawbacks of cash stuffing include: (1) the danger of lost or stolen cash; (2) the time needed to withdraw, sort, and organize cash into envelopes; (3) the temptation to overspend by moving cash to other budget items; and (4) lost interest by not having the money in a bank account.

When using cash stuffing, consider these steps:

1. Allocate your income, based on recent spending patterns, into budget categories, including fixed expenses, variable expenses, debt repayment, and savings.  

2. Label envelopes, folders, or a pocket portfolio with your spending categories.

3. Each payday, obtain cash to place into each category.

4. As you spend money for each category, be sure the envelope doesn’t become empty before the end of the month.

5. Repeat this process each month; adjust amounts as your needs and spending changes.

Paying cash for everything is often not practical, such as online payments for rent, utilities, or other items. Instead, consider a hybrid or blended method, in which you use cash stuffing for only some spending areas. This would allow you to make online payments and earn interest on money on deposit while controlling spending for some budget categories. Also consider budgeting apps that simulate envelopes so you can visually see how your money is being spent.

Other items to note when using cash stuffing:

• Consider starting small, using the system for three or four budget items for which you would like to better control.
• Be safe in keeping and carrying large amounts of cash. You might use slips of paper or play money (that you can buy online) in your budget envelopes, which will still give a tangible experience.
• Search for “cash stuffing” online videos. These often feature colorful, personalized cash binders with compartments labeled for different categories — such as rent, food, savings and sinking funds. 
• Make a commitment. Cash stuffing will not stop you from overspending. You must commit to only spending the amount you set. Use the system you create to be able to trust yourself.

For additional information on cash stuffing,

Link #1

Link #2

Teaching Suggestions

• Have students talk to two or three others to learn about the budgeting systems they use to control their spending.
• Have students create a visual (poster, slide presentation, or video) with suggestions for effective budgeting.

Discussion Questions 

1. What benefits and difficulties are associated with cash stuffing (budget envelopes)?
2. Describe actions a person might take to effectively use cash stuffing.