Is Cash Cool Again?
Stuffing cash under the colchón. Also known as an “abuel@’s rite of passage”. Pero, if you’ve checked out TikTok lately, it seems like the art of saving actual cash – once considered outdated – is now a total vibe.
If life was a piñata, we’d be getting hit pretty hard right now by inflation. Like the “aluminum bat tu prim@ plays baseball with” hard. These unprecedented times have made us think twice about our spending habits. Pero, thanks to social media, there’s now a new “old” way to make saving money easy:
The Envelope Budget Method.
Now, this may be good for budgeting your money, but for actually saving your money for future needs – there are better options.
But before we get too far, let’s learn how the Envelope Budget Method works.
From each paycheck you receive, you take out a percentage of it in cash. This amount should be enough for you to reasonably live off of for general expenses (like grocery and gas), until your next paycheck arrives.
Next, divide the cash and stuff it into envelopes labeled with your intended expenses. For example, say you need $400 cash per paycheck to take care of basic necessities such as gas, grocery shopping, eating out, and general expenses. You would place $100 into each envelope – $100 for gas, $100 for groceries, $100 for take out, and $100 for general expenses (como Happy Hour with la bestie).
That’s it! But keep in mind, you are not allowed to withdraw any additional money or make any additional expenses beyond the $100 you’ve given yourself for each category. Sticking to this method might seem hard, but people have found it helpful – especially when it comes to overspending. It also feels like you’re getting everything for “free”. While we know this isn’t actually true (we wish!), since you don’t see these expenses show up on next month’s credit card statement, or are charged additional interest for them, they sure feel free.
As we mentioned earlier, this method is good for managing your money – but it’s not the best way to save for the future – since there’s no investing involved. Keeping cash around also makes it harder to save money for retirement or for emergencies. For these things, it’s best to put your money into a savings account.
There are different types of savings accounts.
One is a Sinking Fund.
A sinking fund is money set aside for a planned expense, something you know is going to happen – like a dream vacation or a wedding.
There’s also an Emergency Fund.
This is for surprise expenses like replacing a laptop or unexpected illness. (No, Bad Bunny concert tickets don’t qualify.)
No matter which method you choose, you should still be proud for saving money in the first place. While no one knows what the near future holds for us financially, we can at least be assured we are prepared for the basics – even getting a head start on retirement. That is, until Bad Bunny’s tour rolls into town…
Check out our SUMA Academy and learn how to take that first step to invest!
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