TikTok has become the go-to source of savvy money saving and budgeting tips, tricks and hacks for Gen-Z, the latest of which taking the world by storm is a budgeting hack known as ‘cash stuffing’.
The hashtag #cashstuffing has received a staggering 1.1 billion views and counting, signifying the impact that this trend is having amongst people who are looking to budget their finances.
Sam Whillance, discounts expert at Deal.Town weighs in on what the viral trend involves and whether it actually works in practice.
“Cash stuffing is the latest money management hack and involves withdrawing cash from your bank account, and dividing it into different envelopes, each one labelled for a specific outgoing, such as bills, rent, food shopping etc.
“The use of envelopes to tangibly allocate money to specific categories is helping many people to feel more in control of their spending and finances, which can often be lost in a world of spending online, via bank cards, or Apple Pay.
“One video by personal finance TikTok user @shes.on.a.budget has received over 488K likes, in which they demonstrate how the viral hack works.
“However, there are drawbacks to implementing this method in everyday money management, and it is questionable whether it is actually a practical way of living long-term.
“For example, if you are withdrawing large sums of money for expenses such as rent and bills, this is usually paid with a direct debit or a standing order from a person’s bank account. If a person was to adopt the cash stuffing technique, they would then have to remember to deposit the cash back into their bank account before the payment is taken.
“Not only does that add an element of inconvenience by having to physically go to the bank to withdraw and deposit money, but if you forget to deposit the cash in time, it may cause the payment to be missed, leading to financial problems and a poor credit score rating.
“This hack can also cause people to miss out on receiving the interest that they would gain from putting their money into savings accounts or ISAs.
“Aside from being inconvenient and the risk of missing payments, there are also security risks associated with having large sums of cash lying around the house. Fortunately, there are other viral budgeting hacks that work more practically in day-to-day life.”
The 50-30-20 Budgeting Hack
“The 50-30-20 is another budgeting hack sweeping TikTok, with over 6.4 million views for the #503020budgeting hashtag. It works particularly well for people who have several outgoings such as bills and rent payments.
“Whether you are paid bi-weekly, monthly, per client, or per day, this saving trick can work for nearly everybody, if they follow the rule correctly.
“The main premise of this rule is that 50% of your salary should be spent on obligations such as rent, mortgage payments, and bills. 30% of your monthly budget should then be allocated for spending on things you want, but are not completely essential. Should you be in the fortunate position of having disposable income, 20% can then be invested into saving for your future.
“Often, many people will opt for setting up three different bank accounts in order to split their spending across the three categories, which in practice, works much better than withdrawing cash to put in allocated envelopes.”
“Other popular savings hacks as seen on TikTok that seem a little more sustainable in practice include:
The Round-Up Hack
“The hack involves rounding every purchase up to the nearest full number and adding the difference to your savings account. For example, if you spend £18.05, round it up to £19 and add 95p to your savings account, or round up to £20 if you are looking to make more significant savings.
“By getting into the habit of doing so, these small amounts saved for every day-to-day purchase will soon begin to add up.
52-Week Savings Challenge
“The #52weekmoneychallenge hashtag has received over 1.5 million views on TikTok
“For this hack, people have been adding an increasing amount into their savings each day. On week 1, you will add £1, and £2 on week 2, increasing the amount by £1 each week for a full year. By committing to this challenge, people have saved £1,378 over the year.
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