Cash Stuffing - nee "Envelope Budgeting"

Written By: Sandi MacCalla, Founder - LifeSkills Academy ~ 9/18/2023

I first heard about ‘envelope budgeting’ in a Financial Educators’ meeting in the late ‘90s and marveled at this ‘hands-on’ money management system. It has now been resurrected as Cash Stuffing in our electronic age. As King Solomon (970-930 BCE) so wisely proclaimed: “…there is nothing new under the sun.”

So how does this work? Pretty much the same as in the ‘90s with some 21st Century bling and vocab added (below).

The process:

1. Create a comprehensive budget:
   1. Expenses: housing, utilities, groceries, transportation, savings, and discretionary spending
      1. Allocate how much money you need for each category. This forms the basis for your cash envelopes.
2. Label envelopes with the different expenses in your budget.
   1. For example, one may be labeled "Groceries," etc.
3. Withdraw cash (weekly, or monthly) required for each expense category from your bank account.
   1. Only withdraw the total amount you have allocated.
4. Fill the envelopes with the exact amount you can spend in each category.
   1. This is a physical reminder of your spending limits.
5. Use cash from the corresponding envelope to make purchases.
   1. When you need to buy groceries, take the money from the "Groceries" envelope only. Resist borrowing from others.
6. Track your spending
   1. Use a simple notebook, spreadsheet, or budgeting app to record your expenses.
7. Reevaluate and adjust:
   1. Assess how well you matched your budget.
   2. Identify areas where you might need to adjust for the following period.

21st Century Upgrades:

1. Done-For-You Envelope Systems – a quick tour of the internet has practical-to-posh offers to be efficient and have FUN while managing your money (also known as ‘adulting’).
   
   
2. CNBC MakeIt - How 'cash stuffing' can help you pay down debt (cnbc.com) - featured Jasmine Taylor’s ‘success story’ who launched “Baddies & Budgets” in 2021 and is set to clear $1M this year. Proving ‘cash-stuffing’ works, she paid off $32K in debt and is growing her booming business helping others learn and benefit from cash-stuffing.

New Vocab:

• Zero-Based Budgeting Zero-based budgeting - Wikipedia
  • Build your budget with your total income amount and use every dollar down to zero.
  • • This can include:
      • Savings – also called ‘sinking funds.’
      • Monthly reserves for major forecasted purchases (appliances, car replacement, major home maintenance, vacations, etc.).
• Sinking Funds:
  • Monies set aside for short- or long-term goals
    • Emergency fund, car maintenance or holiday gift money.
• Pistachio Rule:
  • If you bring $100 to the grocery store and your bag of pistachios, (or any pricey, guilty pleasure) puts you over the limit, it must go back on the store shelf.

The Upside/Downside of Cash-Stuffing

↑ - Reins in your spending and makes solid progress toward financial goals.
↑ - Highlights where money leaks are and can be stopped.
↓ - Awkwardness of cash in a card-swipe society.
↓ - Challenge with amounts of cash in your home (invest in a fireproof safe?).

“Money is a terrible master but an excellent servant.”
—P.T. Barnum, founder, Barnum & Bailey Circus, Showman & Businessman

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