Cash Stuffing
 

Hi,
My 40 year-old daughter started cash-stuffing recently. For those that don’t know, cash stuffing involves setting aside cash in marked envelopes for different spending categories and only spending what you’ve allocated each pay period.

I am applauding her efforts, of course. Any method that works for her is better than relying on hope that there will be money left at the end of the month.

She remarked to me the other day, “I’ve been paid nearly the same year-on-year, but I’ve never been this flush with ‘extra’ money.”

My reply was that she wasn’t leaking money out of her debit/credit card. Going to the grocery with $50 in cash forces her to be more diligent in what she’s buying.

What other words of encouragement could I use to keep her motivated on her journey? She is contributing to her company’s 401K, she has a Roth account, and a taxable brokerage account. She will heed some of her father’s advice.

I used that method for over 20 years when I was young. Really teaches you self control that will last your entire life.

We use the method also. Dave Ramsey advocates it. Over the years it's been called the bucket method, the envelope method, etc. Really helps laser-focus one's spending and savings.

Is she getting the full match on her 401K?

Yes, Stu. Thanks for checking. I’ve tried encouraging her to put her 401K dollars into the Roth 401K and let the matching dollars go into the traditional. I haven’t been successful…yet.

Good advice with the Roth. She is likely paying so little in tax it will be largely unnoticeable. Maybe suggest she go for it for a month or two. She can change her contributions back if it’s a problem. Or average in: change say 2-3% to Roth, see how it goes, up it to 6 etc. Good in her for getting on top of her finances. It is freeing.

Keeping up with money nowadays can be hard. It's tough with debit cards taking the place of checks. Plus most everybody uses zelle, paypal, cashapp, google pay or venmo off the phone likes it's cash. I had a repair done the other day and at the end the guy said he only accepts zelle, so I called my daughter to pay him through zelle and I would reimburse her. I had 3 other pay apps on my phone, but not zelle. I don't have stripe, apple pay, samsung pay or square either. I'm sure there are other pay apps I don't know, but what a way to lose track of your spending.

A perfect question for GrokAI. Once you use GrokAI a few times, you'll love it.

xAI

My dear old mum had small piles of coins etc. lined up in the kitchen cupboard, as payments for various shops and deliveries.
We never answered the front door, just hid when the rent man called!

Gosh! I hear you loud and clear. It’s all to easy to swipe away your fortune right from the palm of your hand.

Good question! Do not want to let "free" money pass by!

I didn’t know there was an actual name for this method of budgeting, but my mom did this for years and it worked for her!

It might be better to just set up automatic deposits from her paycheck into savings and investment accounts. Also, automatic payments with legitimate billers like utilities, her credit card should be always paid off in full. Using cash should be rare. Then she can look back at accounts and compare to what she feels is proper and within her "budget", without actually going to the trouble to set one up. She can also use Bill Pay from her bank account to pay directly from her phone or computer so she does not need to use checks, buy postage stamps, and mail payments herself.

Common "cash leaks" are things like Starbucks, lunches, etc. Give her a copy of "The Automatic Millionaire", by David Bach. With the exception of some of the brokerage firms in there, it is loaded with good and still valuable advice. You can probably get a copy for less than $10 from Amazon. Cheap enough to get yourself a copy, too.

My mother did this in the 50’s. We didn’t use banks except to cash my dad’s paycheck.

Saving
 

Things like this should really be taught in school instead of all the “math tricks” being taught these days. They should also teach about debt and credit cards but instead they want to let kids become dependent on credit so they think it’s free money.
I applaud your daughter ability to heed her father’s advice.