Transcription
I'm Yannelli, also known as Miss Behelpful, with another Finn Cap Friday brought to you by NGPF.
Back in the Great Depression, unemployment reached 25% in the United States, and banks failed and shut down, which wiped out a lot of people's savings. Those difficult times lasted more than a decade, which means that frugality and tight budgeting became second nature to Americans of that generation. In the '30s, Americans didn't have credit cards or digital payments. Instead, they paid with cash, and many used the cash envelope budgeting system.
Ironically, this trend spread like wildfire on TikTok and YouTube recently, with hundreds of millions of views and hashtags like #cashstuffing, which are putting a new-school twist on an old-school budgeting method. So, what is cash stuffing and how does it work? Well, you could start by thinking about the types of expenses that you have and sort them into categories. So, for example, you could have "going out," or you can put "movies" to make it more specific if that's something that you do a lot. Other categories might be food, snacks, shopping, gifts, graduation money, gas money.
You label each envelope one for each category and then fill it with the amount of cash that you budgeted for that expense. Whenever you pay for something, you should use money from that specific category's envelope because if you take from a different category's envelope, you'll lower the amount of money that you have for other expenses. This requires you to be thoughtful and disciplined with your money. Finally, you refill these envelopes when you get your next paycheck.
A lot of Gen Z-ers are already working jobs and experiencing for themselves what it's like to have money one day and then it's all gone the next day because you spent it all without really keeping track in an effective way. TikTok told CBS News this method is great for teenagers because it helps you visualize the different buckets you would have inside of a savings account.
Now, some people don't like the cash budgeting envelope method, and they say it's tricky because if you lose the envelopes, or they get destroyed or stolen, then all those dollars disappear. But most people still agree that this is a great budgeting method for beginners who are learning about money and learning about their personal financial preferences, one envelope at a time.
Now, there's even digital cash stuffing apps where you have the same concept, but you divvy up the money digitally instead of using actual cash. Now, only time will tell if cash stuffing is the trend that's going to stick around, but many people are wondering, will it help Gen Z be more responsible when it comes to spending?