What is cash stuffing vs. digital budgeting?  Have you even heard those terms before?

Cash stuffing is also referred to as the envelop method.  It actually uses envelopes for things like groceries, gas, fun money, and savings.  You put your budgeted amount in the envelope in cash.  It works well because when you see your money actually leave you envelope, overspending becomes harder.  People who are recovering or reestablishing their financial states like this method because of the culpability.  What’s the con in this method?  Today, most people pay for things online or with a debit card.  It makes using actual cash harder.

Digital budgeting is a more modern approach.  Apps you may be using offer immediate alerts, automatic synchronization, and AI-powered awareness.  Your accounts update immediately which helps you spot trends.  It helps you plan for long-term objectives like buying a home, paying off debt, and/or investing.  The negative here is that the money doesn’t feel “real” and you can easily overspend.  But, if you keep paper or spreadsheet records of your spending, this can be avoided.

Moral of the story:

So, do I use cash stuffing or digital budgeting?  I do a combination of both.  I have a spreadsheet that I use for my budget.  When I pay bills, I deduct the amount paid from the budgeted total.  When I buy groceries, I use a debit card.  I list the amount spent and then deduct it from the total in the budgeted grocery fund.  That way, when I purchase more groceries, I know how much left I have to spend for the month.  It’s like having an envelope where you pull money out and the rest is left for another purchase.  You can do the same with paper and pencil.

Which method is better?  In today’s world, digital is easier.  It’s more convenient, automated, and compatible with how we do our spending.  But, if you’re impulsive or tend to do emotional spending, cash stuffing works better.  You can’t spend more than you have in your envelopes so you may think about it a little more and make better choices.  In my book, I show exactly how to do this in more detail.