Hands with manicured fingernails meticulously stuffing dollars into clear envelopes labeled “Food” or “Gas”: videos featuring this retro budgeting technique appeal to TikTok Americans anxious to limit their inflation-related spending.
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Judia Griner, 25 and more than 200,000 subscribers, started cash stuffing two years ago as a student at Old Dominion University in Virginia.
“I wanted to use my own money to pay my school fees and not have too much debt,” Judia told AFP.
“But I realized I had no idea what to do because I didn’t know how much money I had.”
“I stole my credit card and crossed my fingers hoping it wouldn’t be declined,” she says.
The same applies to Jasmine Taylor, 31, who started in February 2021 and now has more than 620,000 subscribers on TikTok.
“I had a degree but no job prospects. My finances were in bad shape,” says the Texan. “I did a lot of impulse buying.”
The two then turn to this technique, which consists of paying everything in cash, withdrawing their salary in cash, and then putting it in envelopes associated with specific expense items (current expenses, rent, purchases) with the aim of saving.
On TikTok, the #cashstuffing keyword is peaking today with more than 930 million views.
This system, reminiscent of the traditional piggy bank, is by no means new, but very similar to the one popularized by American finance guru Dave Ramsey twenty years ago, before smartphones and contactless payments.
Despite its outdated and inconvenient side (some companies refuse cash payments), this method allowed Judia Griner to save $7,500 to fund her college.
“With the bank card, I didn’t feel like the money was real,” she explains.
But the use of cash acts as a trigger. “I could see myself physically spending my money, saw it disappear, and that helped curb my purchases,” she says. “It’s a problem of my generation, consumerism and overspending.”
Jasmine Taylor, who says she pays 95% of her expenses in cash, got rid of $32,000 in student debt, $8,000 in credit card debt and $5,000 in healthcare debt. And this in a country known for its credit institutions, which encourage households to take on more and more debt.
For Priya Malani, founder of Stash Wealth, a financial advisory service for young professionals, the deteriorating economic environment plays a role in the current success of the envelope system.
“With so many scary headlines — crypto crashes, market declines, looming recession, and so on — it makes sense that people would want a little more control,” she points out. “A ticket that you hold in your hand brings that feeling of well-being.”
But “2023 is probably the worst time to keep your cash at home” because it’s not earning interest and depreciating, warns Jason Howell, a professor of wealth management at American University.
Ms. Taylor, who keeps her envelopes of small bills in a fireproof safe at home, is aware of this. She admits putting her $1,000 savings in the bank.
For the two experts, the frenzy of “cash stuffing” does not indicate a real return to cash in the US, where the trend for several years has been a gradual decline in cash in favor of card or mobile payments.
In 2022, nearly four in 10 Americans (41%) said they would not make any cash purchases during a typical week, according to a recent study by the Pew Research Center, compared to just 24% in 2015.
According to Judia Griner, the envelope method is still “the best budget management system for beginners.” In doing so, he allowed him “to trust the money”.
“You think about it, that’s the biggest advantage of this system,” concludes Jason Howell.