When the news of rising gas prices splashed over the headlines, Yasmine Camilla saw her energy bill double “almost overnight”. Filling up the tank now costs 30-40% more, she says.
But this rising cost of living is something she would never have noticed eight months ago.
“I always had only refilled my car when I needed petrol,” said the 36-year-old, who is based in London, England.
“I would just think, yes, [the payment] will go through because my debt was on credit card, and I always had some money in my bank. But the downside would always be that the money in my bank would run out, and then I would start using the credit cards, she tells CNBC Make It.
At one point, she said she had 10 debit and credit cards in total – and was $ 50,000 in debt.
Today, her consumption habits paint a different story.
After realizing that energy and gas prices had risen, she began to save more money each month. Instead of paying by debit or credit card, she only pays in cash now.
Videos under the hashtag #cashstuffing have received over 360 million views as of Wednesday.
“When I fill up my car with petrol, rather [than] When I top up and then pay for the amount in my car, I top up the petrol based on how much money I have … it’s more controlled and planned, “said the TikTok creator.
“I can decide to cut the budget from somewhere else, maybe slow down my savings until I get a raise.”
The videos mostly contain colorful, personal cash registers with compartments marked for different categories – such as rent, food, savings and falling funds.
Yasmine started cash stuffing in September. She said it has helped her pay attention to all the expenses and limit the expenses. She claimed that she had even managed to help her clear her debt in five months and accumulate savings – something Yasmine said she “never, never” had in her life.
How “cash stuffing” works
The concept is not new. Cash filling is similar to the envelope system for budgeting.
Tania Brown, a certified financial planner and finance coach at SaverLife, explains it this way.
“Before there were banks and ATMs, people paid for things with cash. They would put what they owed in envelopes, label it with what they needed to pay,” she said. “This is a pretty old concept, which has just been revived.”
With a recession likely to rise and inflation warming, it’s no surprise that people need to have “more control over spending than ever before,” Brown said.
“Before, you could go a little over your budget and be okay. But when everything goes up and over your budget … the importance of sticking to a strict budget is more important.”
In addition, a budget is no longer one that you can “set-it-and-forget-it” anymore, she added.
“Depending on where you live, you have to review your budget every week, because prices go up enormously. The most important thing is to protect the essentials needed for you to be able to live.”
This is where cash backing seems to work for those who are already in the habit of evaluating their monthly budgets.
TikToker Shelise is grateful that she started with cash stuffing 7 years ago, “towards now when it’s really, really crowded.”
“Every single expense in our budget went up … inflation really hits us from every direction you can think of,” she told CNBC.
Limiting daily expenses to cash only has always been a “big motivator” for her because it is something she can hold in her hands.
“You can have a visual, you can touch and see it,” said the stay-at-home mom.
But as food prices rise, it has also helped her better allocate her money to necessities such as groceries.
“What we do is we list all our necessities – like food, gas, mortgages, tools, water. And we list how much money we have to work with and we really only prioritize what’s most important,” Brown explained. , the financial planner.
“We’re sacrificing a bit of the holiday or buying clothes because food, property taxes and gas have increased so much … and they have to be paid. We have no choice.”
For Lisa, who attends BeeBudgeting on TikTok, it is the cost of gasoline that has required more attention during her monthly budgeting – and cash-strapping has helped “tremendously.”
“I have had to readjust my expenses quite a few times to accommodate how much gas I used. [Three months ago] I could budget just $ 60 for each paycheck to go for it … I’m spending $ 120 now, said the Canadian.
As costs rise, the cash-filling or envelope system allows increases in total spending to become “more obvious,” says Diahann Lassus, a certified financial planner.
“Inflation shows up faster when an envelope’s target amount is not enough and it requires time to understand where the money is going.”
Like Camilla, Shelise said that in the past she would have counteracted inflation by using credit cards or payday loans, which she used to do in the past.
“The thing was, [my husband and I] earned enough money. We just did not know where the money went. “
Cash stuffing has also helped individuals prepare for more difficult times ahead. For Shelise, this means projecting future expenses that can be safely tucked away in envelopes.
“Christmas comes at about the same time every year, my daughter’s birthday is on the same day every year. I can have an envelope for her school activities and save some money. When these things come up I can just go straight to it and say: ‘Here’s some money for this,’ she said.
“It helped me really understand that I could be prepared in advance if I started now.”
Shelise stressed that it is not too late to start practicing cash backing now, even if it only means “getting a month ahead of the bills.”
“I’ll actually beat inflation if I can pay off my credit card now compared to letting that interest rate pile up.”
Lassus agreed and said that it is during such times that “variable interest rates go up.” She referred to how interest rates fluctuate over time.
“The cost of credit cards, car loans or other large purchases can be more expensive. It is so important to stay within a budget in times of high inflation so that debt does not become a major issue later.”
How to get started
If you are planning to go out on a cash trip, here are some things to note before you do:
When it comes to finances or budgeting, it can be “really overwhelming,” Shelise said. She advises people to start with cash stuffing within their “four walls”, or where they live.
“Just list four or five expenses that you can start with … maybe your mortgage, water and electricity bills, food and gasoline for your car. Get a simple binder and just work on being consistent every time you get your salary. “
Brown added that the cash stop method is not “a quick fix” and she suggests choosing only one area of over-spending to begin with.
“If you think it really helps you keep control of your spending in that area, then expand to another area where you’re struggling. It does not have to be all-or-nothing.”
2. Safety first
It may seem satisfying to have folders filled with money, though you should too Be careful about leaving huge amounts of cash at home.
“Here in the United States, homeowners ‘and renters’ insurance usually only covers a certain amount of money if it is destroyed or lost. I would urge people to check with their insurance companies how much of this cash can be recovered,” says Brown.
To protect her money – and reap the banks’ interest rates – Shelise deposits her savings every time she raises $ 500 to $ 1,000. She then puts counterfeit money, which she buys on Amazon, back in her folders as placeholders.
“I can still have something in my hand that I can touch. But I do not have the money left.”
3. It requires work
There is no doubt that cash withdrawal is more time consuming than paying with a debit or credit card, which can be a frictionless experience.
Brown said: “When you think about the time you have to take to create the budget, go to a bank to withdraw the money … then come back home, share the money, put the money in envelopes. Do you have time to spend on this? ? “