Hands with manicured nails meticulously place dollars in transparent envelopes stamped “food” or “gas”: videos featuring this retro budgeting technique are appealing to Americans on TikTok anxious to limit their spending in the context of inflation.
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Judia Griner, 25 and more than 200,000 subscribers, started cash stuffing two years ago when she was a student at Old Dominion University in Virginia.
“I wanted to use my own money to pay my school fees and not be in too much debt,” Judia told AFP.
“But I realized that I had no idea what to do because I didn’t know how much money I had.”
“I swiped my credit card and crossed my fingers hoping it wouldn’t be declined,” she says.
Same story for Jasmine Taylor, 31, who launched 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 was doing 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 placing them in envelopes assigned to specific expenditure items (current expenses, rent, shopping), with objectives of saving.
On TikTok the keyword #cashstuffing peaks today at more than 930 million views.
Far from being new, this system reminiscent of the traditional piggy bank is very similar to that popularized twenty years ago by the American finance guru Dave Ramsey, when smartphones and contactless payments did not exist.
Despite its outdated and impractical side (some businesses refuse cash payments), this method allowed Judia Griner to save $7,500 to finance her studies.
“With the bank card, I didn’t feel like the money was real,” she explains.
But using hard cash acts as a trigger. “I might see myself physically spending my money, seeing 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 fee debt health. And this in a country known for its credit organizations that encourage households to go into ever more debt.
For Priya Malani, founder of Stash Wealth, a financial advice service for young professionals, the deteriorating economic context plays a role in the current success of the envelope system.
“With so many anxiety-inducing headlines — crypto crashes, market pullbacks, the threat of a recession and so on — it makes sense that people want to have a little more control,” she points out. “A ticket that you hold in your hand brings this feeling of comfort”.
But, “2023 is probably the worst time to keep your cash in cash in your home” because it earns no interest and depreciates, warns Jason Howell, professor of wealth management at American University.
Ms. Taylor, who keeps her envelopes lined with small bills in a fireproof safe at home, is well aware of this. She admits depositing her money in the bank from 1,000 dollars saved.
AFP
The frenzy of “cash stuffing” does not indicate for the two experts a real return to favor of cash in the United States where the trend for several years has been for the gradual decline of cash in favor of card or mobile payments.
In 2022, nearly four in ten Americans (41%) said they did not make any cash purchases during a typical week, compared to only 24% in 2015, according to a recent study by the Pew Research Center.
According to Judia Griner, the envelope method is still “the best budget management system for beginners”. He thus allowed him “to trust himself vis-à-vis the money”.
“It makes you think, that’s the biggest advantage of this system,” concludes Jason Howell.