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Financial advisor explains what 'cash stuffing' is and how it works

The "cash stuffing" method has become viral on social media, helping people get out of debt and keep finances on track.

AUSTIN, Texas — A new social media trend is bringing back an older way of managing money. What was formerly known as the "envelope system" has now become viral as "cash stuffing."

It has grown in popularity by Gen Z to help combat inflation.

Nathan Fort, the founder and president of Vital Retirement Planners in Cedar Park, said all you need are some envelopes and cash.

"The principle of cash stuffing is actually very old. It was created long before hashtags were around. It's a simple concept of dividing your income into expenses," Fort said.

The way it works is you divide your income into envelopes labeled with different expense categories and stuff them with money.

When you pair rising costs along with credit card and student loan debt, Fort said it's easy to understand why this has become so popular recently, especially among younger generations.

"They're having to be really forced to be much more careful with how they spend their money and they can't afford miscellaneous, impulsive spending," Fort said.

The "cash stuffing" method is a strategy to get out of debt and keep your finances on track.

"You can really be caught off guard and even be shocked and surprised by your spending habits when you finally get into your statement and see where your money's going," Fort said.

That's why he said it's important to review your finances at least once a month.

While the "cash stuffing" method works, Fort said it's more of a short-term solution to manage spending. One drawback is you're not building credit. 

"If you're not using credit in your spending, then you're not building that credit. That could be useful later down the road if you need to buy a house or qualify for a car," Fort said.

Compulsive spending can be a difficult habit to break, but Fort said it's possible if you take a few steps to prioritize your expenses.

"The practice and the principle in and of itself are excellent and I think it can just graduate into a more professional electronic format at some point when people are ready," Fort said. 

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