According to Janine Horn, Momentum financial advisor, a budget is the backbone of one’s financial health.
While the thought may sound tedious at first, new ways of budgeting are taking the social media by storm making the budgeting process even more enjoyable.
A new way of budgeting known as cash stuffing is rapidly becoming viral on TikTok with many users of the platform starting to use this method to take control of their finances.
Cash stuffing involves allocating a specific amount of cash you can spend each month on different types of expenses like groceries, entertainment, and gas.
You then stuff the allocated cash in envelopes labeled specifically for these expenses. It’s basically a fixed budget in an envelope.
While cash-crammed budgeting can help people stay in control of their finances, is cash really king?
According to Tyrone Lowther, head of Budget Insurance, the answer is yes and no.
“While this practical method of saving money has its advantages, such as allowing you to see how much you actually spend and limiting reckless spending, it should be done wisely. be cautious, especially in South Africa, where holding large amounts of cash is often not compliant. a good idea,” Lowther said.
Before you dismiss the idea of cramming with cash, remember that taking control of your finances by budgeting is about balance.
This means hoarding cash combined with other actions, such as setting realistic goals for your budget, making the most of rewards programs, and starting or increasing your emergency fund. can you help to get you on the right track.
Here are cash tips designed for South Africans:
1. Combine with other budgeting techniques
Since you shouldn’t keep large amounts of cash with you, consider using cash for some expenses while using alternative budgeting practices to take care of others.
2. Don’t brag about it on social media
While cashing in is a trend on social media, don’t let opportunistic criminals know you’re keeping a large amount of cash with you by posting about it online.
3. Keep your envelopes safe
Invest in a quality safe, installed by professionals. Make sure you have home belongings insurance, which provides coverage for money stored in a safe.
4. Don’t splash cash
If you’re going to the store to buy groceries, don’t take all the cash you’ve stuffed in your grocery envelope. Instead, do a little research by looking at the specials and discounts advertised by the stores, then write your grocery list.
Writing down a grocery list will tell you how much you need to bring and ensure that you avoid the temptation of impulse purchases.
5. Focus on areas where you tend to overspend
You can easily go over budget when it comes to things like entertainment and clothing shopping, so it’s important that you decide what you can comfortably afford for these.
If you splurge a bit at the beginning of the month, be realistic and include that in your allocation. Remember that you will need to cut back for the rest of the month.
6. Remember that you will lose some profit
If you keep all your money in an online bank account, you will get some interest. The portion you choose to withdraw as cash will not be charged interest.
“But if it helps you avoid overspending, then what you lose in interest will help you avoid unnecessary debt,” says Lowther.
7. Don’t draw all at once:
If you’re considering hoarding cash, don’t pull out a large sum. Instead withdraw in a few days so you don’t carry too much cash.
8. Have a savings/emergency fund envelope:
Committing to saving a certain amount each month will allow you to build savings or an emergency fund into your budget.
According to Katlego Gaborone, a financial planner at Momentum, everyone needs to save at least three months’ salary in an emergency fund.
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