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What is cash stuffing and how does it work?

This savings technique is encouraging people to use cash in a bid to boost their finances.

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A hand holding four £10 notes.
The key to cash stuffing is to establish a monthly budget from your paycheck.

When it comes to saving money, there are endless things to try - from thrifty challenges to no-spend days. 

But one idea that’s caught people’s attention recently is cash stuffing. 

Cash stuffing is not a new concept, but it’s trending on social media as more people are looking for ways to navigate the current cost of living crisis. Inflation is still high at 3.2% and there are soaring bills and expensive food prices to consider. 

So, let’s dive into the details of cash stuffing, and consider the pros and cons of this technique for savvy savers. 

What is cash stuffing? 

As its name suggests, this savings technique is all about cold, hard cash. Savers will need to put aside their debit and credit cards and instead head to the cashpoint. 

The key to cash stuffing is to establish a monthly budget from your paycheck. You can either follow the popular 50/30/20 rule or devise your own strategy. 

Once this has been considered, you can then split the budget into different spending categories. For example, the weekly food shop, travel costs and an emergency fund. 

You’ll then need to label envelopes with these categories and stuff each envelope with the necessary money. 

Cash stuffing then requires the saver to be committed to only spending the money in each envelope. This helps someone to stick to their budget and not be tempted to spend money impulsively. 

Plus, if you have money leftover in the envelope at the end of the month, you can either keep it there as a buffer for next month or put the money into savings. 

The process then repeats when the month restarts and soon you’ll get into a rhythm of spending - and hopefully saving - the cash from each envelope.

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Who should try cash stuffing? 

Anyone can try cash stuffing as each budget will always be personal and adapted to your needs. However, to be a success it does require a lot of determination and commitment - plus a regular trip to the bank for the money each month. If you are already budgeting regularly and sticking to it, then it might not be the technique for you. 

However, cash stuffing does work well for someone who might be overspending each month and needs to curb this habit. By only using the cash in the envelopes this should remove temptation and keep you on track. 

It’s also worth exploring if you are someone that spends regularly on a credit card and struggles to pay it off each month. First, try and resolve any unpaid debts, and then turn to cash stuffing to get your finances in order.

What are the pitfalls of cash stuffing? 

There are many good reasons to try cash stuffing - from preventing impulsive spending to growing your savings pot - but there are some negatives too. 

For example, most savings accounts offer protection of up to £85,000 via the FSCS but cash is harder to recover if it’s lost or stolen. Plus, savings accounts also currently have high interest rates of around 5% and this gives savers the chance to earn some extra interest on their money. Unfortunately, this is not possible if you are always using cash. 

To cash stuff, or not to cash stuff? 

Saving money is always a challenge, but cash stuffing does take some time as you have to plan out your budget and organise the cash for it to work effectively. 

That being said, the hard work can pay off - especially if you are currently in an overspending rut. 

So, to cash stuff or not to cash stuff? 

Maybe it’s time to give it a go and see how much you could save…

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About Lucinda O'Brien

As a trained journalist, Lucinda has spent the past 10 years writing and editing content for regional and national titles, including The Mirror, WalesOnline and Manchester Evening News. She is now a personal finance editor and specialises in savings, helping people to make confident financial decisions so they can save for what matters most.

View Lucinda O'Brien's full biography here or visit the money.co.uk press centre for our latest news.