Financial Empowerment Through Cash
Mar 17, 2023
In a recent episode of the Financial Times’ Money Clinic podcast, host Claer Barrett explores whether ‘going cardless is the ultimate budgeting hack’ and speaks to the Bank of England about their commitment to cash, asking if it’s poised to make a comeback as people seek empowerment through greater control of their finances.
On the subject of budgeting—a hot topic in the present, challenging economic environment—Barrett speaks to popular TikToker Euphemia Senna, widely known by her handle ‘She’s On A Budget’. When her marriage of 15 years broke up, and Senna was left living in a single room with her three children and large debts, she turned to US finance guru Dave Ramsey, who recommends people use cash to take control of their finances.
‘Cash Stuffing’ is the latest incarnation of a time-honoured technique that divides a person’s income—in the form of banknotes and coins—into a number of envelopes. Each envelope covers one area of spending, which would typically include rent payments, bills such as electric, gas and water, groceries and transport. Using this method, Senna has been able to clear her debt and start putting away savings.
When I get paid, I write a budget and that will include any direct debits that are due to come out… That direct debit money will stay in the bank and the remaining money will be withdrawn in cash. That is the money I use to stuff into my envelopes.
The technique enables people to categorise their expenses in a visual and tactile manner, allowing them to immediately see whether any money is left after essentials are covered that can then be saved towards a future goal or spent on non-essential things.
I’d say the pros of using cash stuffing is that it’s a simple method most people can take on and align with. It helps you break down your expenses and put them into little pots, and helps you see a way to budget… I think most people can benefit from that.
Regarding wider cash use in UK society, Barrett interviews Sarah John, Chief Cashier for the Bank of England, who is responsible for the nation’s banknotes—from design through to printing and distribution. She observes that, while cash use for transactions remains below pre-COVID levels, it is starting to rebound. Alongside people returning to typically cash-heavy venues such as pubs and restaurants, the difficult economic conditions are driving people to seek better control of their finances, for which cash is well suited.
With the cost of living, we often see people turn to cash in times of difficulty, basically for budgeting purposes, because it’s so tangible and people… like to know how much money they’ve got, and when it’s gone.
John emphasises the Bank’s commitment to keeping cash in circulation, acknowledging that a rising challenge is ensuring everyone has access to it as banks and ATMs close across the country. The UK Government is exploring greater support for cash access, and pilot projects are looking at ways to improve cash services in communities across the country, however much remains to be done.
[People are] having their homes taken away from them. They’re having their wages reduced. They want to hold onto something. More than that, they want to take charge and feel empowered by something. Cash does that.