The Cash-Stuffing Craze May Do More Harm Than Good

Economic uncertainty might have you stockpiling cash at home, but that plan may backfire.

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Updated May 28, 2024
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Cash stuffing is essentially the TikTok-trendy version of the envelope budgeting system. It’s not a new money-saving strategy, but it is making a comeback. Cash stuffing isn’t limited to envelopes, though. Some people are using old-school methods — like cramming cash under the mattress — to hoard and hide their money at home.

Given rising inflation and the economic turmoil we’ve witnessed over the last two years, it makes sense that people would resort to tangible ways to protect their wealth or make extra money. Cash stuffing isn’t without its risks, though, and some of them might turn you off from this trend entirely. Let’s look at eight specific risks you should consider.

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You might misplace your money

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If you think you could never in a million years forget where you hid your cash stash, we respectfully invite you to count how many times you’ve misplaced your phone. Or your wallet. Or your car keys.

Sure, you’d remember storing your money somewhere obvious, like the safe in your closet. But what if you choose a more obscure location, like under a floorboard — and later can’t remember which floorboard you picked? “Out of sight, out of mind” could quickly become “out of sight, out of money” if you aren’t careful.

You won’t have FDIC protection

Prostock-studio/Adobe Sneaky scared robber ready to steal something at home

When you deposit money in an FDIC-insured bank account, you’re automatically protected against bank-incurred losses (up to $250,000 per depositor, per insured bank, for each account ownership category). In other words, if the bank goes belly up, your funds won’t take a hit. Banks are also required to maintain significant cash reserves to prevent them from running out of money.

No offense, but your cash-stuffing system probably doesn’t have those kinds of fail-safes in place. If someone accidentally throws out the fake soda can you’ve been using as a piggy bank, all you’ll be left with is a broken heart and a lot of regret.

Pro tip: If you’re struggling to build an emergency fund in retirement, consider these ways to supplement Social Security income.

You might get robbed

2mmedia/Adobe 3d rendering flooding houses

Keeping large amounts of cash on hand or at home may make you a target, especially if you’re posting videos about it on social media. Not only could that put you in physical danger, but it puts your money at risk, too.

If someone robs a bank, the bank’s insurance would kick in and protect your funds. Similarly, if someone steals your debit card, you can report the theft, cancel the cards, and dispute any fraudulent activity.

But if someone gets their hands on your cold, hard cash, there’s a good chance you’ll never see that money again.

You could lose your money in a disaster

2mmedia/Adobe 3d rendering flooding houses

Let’s say you have $500 packed into an envelope. Your apartment floods, and that $500 floats away, right out the front door. “No sweat,” you think. “My insurance will reimburse me.”

The truth is, not every personal property or renters insurance policy covers cash losses. Those that do often cap their cash reimbursements at $200. If all the cash you’ve stuffed is destroyed in a flood, fire, or other disaster, you’ll have next to no recourse for getting it replaced.

If you pass away, your family may not know to look for the cash

Chaay_tee/Adobe unhappy female employee sitting in the couch

Say you’ve tucked away all this cash, found the perfect hiding place, told no one about your loot — then pass unexpectedly. You will have gone to all that trouble, only for your cash-stuffing crusade to have no material impact in the end.

If you’re hesitant to disclose the whereabouts of your secret stash, add a clause to your will explaining where to find the money and how it should be divided. Leave a treasure map with your executor if you must. Just do something. After all, cash stuffing without a contingency plan is an exercise in futility.

You can’t take advantage of credit card perks

ViDi Studio/Adobe using mobile phone hold package bag with purchases after shopping credit bank card

It’s fair to be wary of overutilizing credit cards, but you should be just as wary of overutilizing cash. Cash purchases don’t come with any additional benefits. You won’t earn rewards for your spending, and you won’t be covered by the purchase protection that comes with some credit cards.

Paying in cash also won’t do anything for your credit score. If you take your cash stuffing to the extreme and don’t use your credit cards at all, you could miss out on the opportunity to build a positive credit history.

Pro tip: Get the best of both worlds by using the best cashback credit cards to supplement your cash stuffing.

You won’t be able to make online payments

Ngampol/Adobe businessman holding credit card

We’re not a totally cashless society, but electronic payments have certainly become the norm. Besides, there are some expenses that you simply cannot pay with cash.

If most of your income is holed up in a false-bottom drawer, you’ll have a hard time making your credit card payments, buying plane tickets, or taking advantage of online deals.

Part of the logic behind cash stuffing is that it can curb spending, but when it complicates how you pay for or save on essential expenses, it might not be worth the inconvenience.

You could miss out on profits when the market increases

Yingyaipumi/Adobe smartphone with cryptocurrency money link

If you’re unfamiliar with the time value of money, it’s a financial concept stating that the money you have today is more valuable than money you might have tomorrow. That’s because you can allocate today’s money in such a way that it generates more money over time.

Let’s apply this principle to cash stuffing: If you hide $250 in your cupboard and check on it in a year’s time, you’ll still have $250. But if you invest that $250 and ride out the market, you could end up with far more.

Cash stuffing might save you money, but it will never make you money — and a 0% ROI does next to nothing for building wealth.

Bottom line

Costello77/Adobe pulling cash from wallet

While cash stuffing has its merits, the potential fallout deserves your full consideration. Take this strategy too far, and you risk losing all the money you’ve sequestered.

Besides, cash stuffing isn’t the only way to combat inflation or prepare for an economic downturn. For example, creating an inflation survival plan and diversifying your investments are some things you can do before the next recession to protect your wealth and peace of mind.

One thing you should avoid at all costs, however, is blindly following trends out of panic. No matter what financial strategies you add to your arsenal, your best line of defense will always be maintaining a level head.

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Author Details

Sarah Sheehan

Sarah Sheehan is a writer, educator, and analyst who focuses on the impact of health, gender, and geography on financial equity. Her ultimate goal? To live beyond the confines of chasing the next dollar — and to teach everyone else how to do the same.