If you’ve ever struggled to stick to a budget or find yourself overspending each month, cash stuffing—also known as the envelope system—might be the savings solution you’ve been looking for. This tried-and-true savings method can help you take a hands-on approach to budgeting, enabling you to see where your money goes and hold yourself accountable, all while avoiding the temptation to overspend.

What is the Cash Stuffing Savings Method?

Cash stuffing is a simple yet effective budgeting technique that involves allocating a set amount of physical cash for different spending categories, usually placed in envelopes. Each envelope represents a specific category—like groceries, entertainment, or gas—and you only spend the money in the envelope designated for that category.

The method is designed to help you live within your means by limiting spending to the cash on hand for each category. Once the envelope is empty, you can’t spend more in that category for the month. It’s a hands-on approach that makes keeping track of your spending easier as your available money is right in front of you.

How Cash Stuffing Savings Works:

1. Separate the Automatically Paid Bills: Before you stuff your envelopes, calculate the amount of your monthly income that remains after the automatic payments are removed from your account.
2. Create Spending Categories: Identify where you spend the most, such as groceries, dining out, or transportation.
3. Set a Budget for Each Category: Allocate a fixed amount of cash for each spending category.
4. Place Cash in Envelopes: For each category, put the assigned amount of cash into an envelope.
5. Spend from the Envelope: Use only the envelope cash for each category.
6. Track and Adjust: If you run out of cash in one envelope, you’ll have to adjust your spending in other areas for the month or wait until the next pay cycle to replenish.