Beware of TikTok Trend: The Risks of Cash Stuffing in Envelopes Revealed for Savers’ Savings

A home insurer has issued a warning about the risks of a popular budgeting trend called “cash stuffing” due to a surge in theft claims.

Cash stuffing, also known as the cash envelope system, is a budgeting technique that aims to help cash-strapped households manage their spending and saving without complex spreadsheets.

The process involves withdrawing cash from a bank account and dividing it into labeled envelopes for different categories such as groceries, bills, rainy day funds, and Christmas shopping. This ensures that individuals only spend the cash allocated in each envelope.

Despite its popularity on TikTok and other social media platforms, Admiral’s home insurance division has witnessed a significant increase in theft claims involving stolen cash from envelopes during break-ins.

In the past year, cash theft claims have risen by 77%, with an average claim amount of £333.

An Admiral customer who relied on the cash stuffing method lost £1,700 from two stolen envelopes and had to make an insurance claim.

While dividing money into different spending categories can be an effective budgeting strategy, especially during the expensive Christmas season, the insurer advises against keeping large amounts of cash at home due to the associated risks.

Admiral emphasizes the importance of checking the coverage limit for cash under home insurance policies to protect against loss or theft.

It’s worth noting that some insurance policies may not cover cash theft from a residential property unless force or violence was used during the break-in.

Additionally, keeping cash outside a bank account means missing out on potential interest earnings, and using cash for payments offers less consumer protection compared to credit or debit cards.

As an alternative to cash stuffing, numerous banking services and apps provide “savings pot” features that offer similar budgeting assistance.