Cash-only budgeting methods from the 1p challenge to zero-based budgeting

Ranking 6 of the most popular ‘cash-only’ budgeting methods on TikTok:

Cash stuffing:

The TikTok budgeting method known as ‘cash stuffing’ has gained over 818,100,000 million views, now considered the most popular cash-only budgeting method. Cash stuffing is the process of only spending physical cash on your expenses that you have pre-divided and put into different category-based envelopes. This method helps prevent overspending and impulse buys, helping you stick to your monthly outgoings. When cash stuffing you can use envelopes or plastic binders to label different spending categories such as rent, food, travel, and social outings. Once you have your labelled categories you can add the amount of cash to each envelope, better known as ‘cash stuffing’.

Penny challenge:

The viral 1p a day challenge, also known as the penny challenge, has gained a staggering 45.5 million views on TikTok. This budgeting method works by putting a penny into a jar every day for 365 days. Starting with just one penny, each day you increase the amount of cash you drop in the jar by 1p. Meaning on the last day you will be adding only £3.65 to the pot. Although this doesn’t sound like a lot of money each day, this will accumulate to £667.45 by the end of the year!

Zero-based budgeting:

The zero-based budgeting method has amassed 12.8 million views on TikTok to date. Zero-based budgeting means budgeting by justifying and allocating all expenses for each time you are paid. By starting from ‘zero’ at the beginning of each budget, you can create a thorough process for designating exactly where to allocate your funds. The idea with zero-based budgeting is that you start each month with nothing in your bank and you end it in the same way. This doesn’t mean that you have no money at all but rather that you’ve balanced your income and outgoings perfectly. 

50/30/20:

The 50/30/20 rule is an easy budgeting method that can help you to manage your money simply, effectively and sustainably which you can also apply with cash that has gained 6.4 million views. The rule suggests dividing your monthly income into three spending categories: 50% for needs, 30% for wants and 20% for your financial goals. The 50% towards needs includes regular essential outgoings such as rent, mortgage and bills. 30% should be set aside for ‘wants’ such as hobbies, shopping or subscriptions. Finally, 20% can be used for financial goals such as paying off debt, making investments or contributing to savings. 

Money pot method:

The money pot method, also known as the jam jar method or piggy banking, has accumulated 5.1 million views on TikTok. This involves dividing your money into separate pots for different expenses such as car, bills, rent or mortgage and emergency savings. This means you can add money to the pots, but you will only be able to break the pot at the end of the month when the money is due. This should prevent consumers from taking out money mid-way through the month.

Value-based budgeting:

One of the lesser-known methods with only 3,642 views on TikTok so far is value-based budgeting which can be used with cash to help you save your money. This method is about spending money on the things you value most in life rather than focusing on what to cut out. This allows you to create a spending plan that helps you to feel good about the things you are buying, and what you’re saving for. You will categorise your spending in these chosen categories, allocating a set amount to each every month with cash.

Sarah Connelly a finance expert at Cashfloat comments on whether a cash-only approach is for you:

‘Living a cash-only life means a person has to stop using their debit and credit cards and rely only on cash for all their purchases. If you’re looking to go cash-only then this would entail thorough financial planning, breaking down your exact monthly outgoings to determine if this is feasible for your lifestyle. 

The biggest benefit of using a cash-only budget is that you’re typically more motivated to stick to your budget as you start physically running out of money. In the long run, relying solely on cash  can be highly beneficial because there will no longer be any credit card debts or impulse purchases made, relieving stress and anxiety when facing the prospects of paying a bill.’

Credit  to https://www.cashfloat.co.uk/.