Saving money is made simple when you have the ability to keep your eye on your spending habits.

First…

What is cash stuffing or cash envelope system?

Cash stuffing is a budgeting system that is used to allocate periodic budgets (weekly or monthly) for mostly planned current expenses and stuff correlative amount of cash in labeled envelopes.

Planned current expenses suggest that cash stuffing or cash envelope system must be preceded by a periodic budget made for all expenses, to be covered by the system.
In summary the steps to cash stuffing are:

1. Having a monthly budget that covers all categories of planned cash spending.

Write down those categories on a list.

2. Writing down each listed category on an envelope.

Tick off your list to ensure that every category has an envelope.

3. Put in each envelope, the corresponding budgeted amount.

Do this at the beginning of every budget period, usually the beginning of a month.

4. Pay for expenses with cash from appropriate envelopes.

5. Track your spending, analyze and fix weaknesses in the system .

6. Rinse and repeat in a new month or in a new budget period.

Cash stuffing is great way to control spending habits and decrease debt but it also has its downsides.

The downsides are:

1. The interest on a high-yield savings account foregone.

Cash stuffing eliminates the opportunity of earning interest, that accrues on money kept in a savings account.

2. Keeping cash stuffed in envelopes increases the risk of loss to theft or carelessness.

Physical money lost is irrecoverable except in very rare cases where it’s found and returned by a 'Good Samaritan'. But if money is lost from your credit card, you can contact your bank to recover some or all of it.

3. The process of cash stuffing is time consuming. It takes a lot of time to draw up a budget, create a list and stuff cash in appropriate envelopes.


Before you decide to use cash stuffing as a budgeting method, check to see if it would help your money personality to save more money.



https://ayipost.com/blog/f/why-is-cash-stuffing-a-popular-budgeting-program