Atlantic Blog

When you're a kid, and you make a little money, maybe from a birthday, an allowance, or mowing lawns, your first thought probably wasn't about budgeting. I spent that money as soon as I could. It practically flew out of my pocket - going out with friends to a movie, candy, buying a game, or eating out. Nothing's better than some sweet instant gratification when you're a kid, but then the money's gone, and you're broke again.

As adults, we have these pesky things like bills and responsibilities, and while I'm sure quite a few of us loathe the B word (budget), it's important to know how much spending power you actually have. It's irresponsible to blow an entire paycheck on candy (but you do you).

Now, what if there was a simple budgeting hack you could use that allows you to track where your money is going AND helps keep you accountable with your spending plans?

Stuff it in an Envelope.

It's not quite that easy, but it's pretty close.

The Envelope Budgeting Method (or the Cash Stuffing method if you have TikTok) helps you to physically and visually dissect your spending power into the necessary pools of life. It helps make budgeting feel a bit more tangible than if you're just putting everything in a spreadsheet once a month and forgetting about it.

So how do you do "Cash Stuffing"? This is how people normally do it:

• Start by listing your monthly expenses. Listen, at the end of the day, we're still budgeting; you're going to have to make some lists. Write out your monthly cost for fixed monthly expenses - rent, insurance, car payments, etc. For variable costs like groceries or other necessities, calculate an average based on your last few months of expenses. Not sure where to start? Check out our previous blog: 8 Reliable Tips to Weed Out Bad Financial Habits.
• Get the envelopes ready. Write out the expense categories on your envelopes - decorate them however you want to make it a fun arts and crafts project, too. Take your cash and divide it between each envelope based on the amounts you calculated in your budgeting sheet. If you spend $300 on gas a month, put that in the gas envelope.
• Unstuff that Cash. Buy your groceries, take out, or whatever categories are important in your life using the envelopes. When they run empty, you're done for the month. It'll limit you from overspending and make the decrease in funds for every purchase all the more tangible. If a necessity runs out, it tells you that you need to rebalance your budget - take a little out of frivolities and reinforce your necessities envelopes.

However, keeping large sums of cash at home isn’t the safest method of financing your life. By withdrawing large sums and keeping them around the house in envelopes you open yourself up to potential risk. We have a few alternatives we would suggest that make Cash Stuffing safer and more convenient for you.

Who Needs Cash?

It's the age of plastic. No one wants to go through the hassle of carrying around large wads of cash. It can also create a large security risk for you and your expenses.

Instead of putting cash in envelopes, you can use them to track your spending. Write the total on the envelope and subtract from it every time you spend from that category!

Not ready to keep up with constant math? Instead of keeping cash in the envelopes, use them to store your receipts throughout the month. Then, tally the results and analyze your spending habits and determine where you can adjust your discretionary spending. Saving your receipts can also help you come tax season if you need to look back on any big purchases.

Like the idea of having set spending limits but want to avoid carrying cash? It adds an extra step to the process, but if you want to limit how much you spend on expenses like fast food in a month, buy a gift card, and when it runs dry, you stop!  

Let's Go Paperless

Maybe you're not ready to manually track things or tape envelopes to your wall. That's okay, we can embrace the digital world to do a lot of the work for us.

Try dividing your expenses between multiple accounts or sub-accounts. Know your fixed expenses? Deposit the total into your account every month, and the rest goes into another for your variables - like our Free Kasasa Cash Checking. This can help you keep a better idea of how much spending power you actually have.

Want a breakdown of your spending right from your account? Check out the "Spending Analysis" tool in Digital Banking under Financial Wellness!

Paging Dr. Freud.

So why does it work? Why are people posting on social media about Cash Stuffing? Is it just a trend that people are knuckling onto, or does it actually work?

I think the answer to that depends on a case-by-case basis, but here's why I think it works. For visual learners, it helps you visualize how much you're spending each month and where. It teaches a lesson on where you're overspending when the envelope runs dry and helps analyze your spending habits to give you important personal data.

If it seems like something that would help you - try small! You know how much your fixed bills are, so instead, divide your variable expenses into envelopes.

We're Here to Help!

Listen, budgeting doesn't have to be snooze-worthy. The best thing we can do is find ways to make life's simple or rote tasks a little bit more fun. Budgeting is a necessity - it's the best way to keep your money organized and achieve your financial goals, and maybe the Cash Stuffing/Envelope Method can help you.

No method is perfect for everyone; it's important that you find what works best for you. Don't worry; we're always here to help you Do Better.

Do you need help paying your bills or consolidating your debt to make budgeting a little easier? Please stop by any of our convenient branch locations or call 800-834-0432 to speak with a team member today.

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The Atlantic blog strives to deliver informative, relevant, and sometimes fun financial information. If you enjoyed this article, please forward it to a friend.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.