Warning for anyone trying viral saving trick that could see you LOSE money
SAVVY savers are being warned about a viral saving trend that could actually see you lose money.
The trend of “cash stuffing” is growing in popularity but experts warn that it does come with some risks.
Cash stuffing is a way of budgeting that involves withdrawing money from your bank and dividing it up into labelled wallets for different spending categories.
For instance, people might have a wallet for food shopping, petrol, bills and leisure activities.
Some also stuff cash throughout the year for big events like Christmas, anniversaries and birthdays.
The budgeting hack has grown in popularity due to people sharing their cash stuffing to social media platforms such as TikTok.
Single mum, Euphemia Moore, 38, paid off £8k of debt in two years and saved £7k using the cash stuffing method.
And one woman who started cash stuffing to clear her £56k debt turned the budgeting hack into a business and made a whopping £695k last year.
But experts at Admiral Home Insurance are warning budgeting Brits about the security risks involved in having large sums of money stashed in your house.
Insurance risk
Noel Summerfield, head of household insurance at Admiral, said: “Allocating different spending pots can be an effective way of budgeting and staying on top of spending, however, it does have its risks.
“We have seen multiple claims where large amounts of cash kept in envelopes has been taken during a break-in.”
The insurer has recently reported that cash claims have doubled in the first three months of 2023.
And they are urging people who are using this method of saving to check how much their cash insurance policy covers them for should the worst happen, and the money is lost or stolen.
The average claim for thefts involving cash over the last five years is £336.
Know your limits
Summerfield added that many insurance policies do not cover theft of cash from your property unless force or violence was used to enter or leave your home.
And while cash is covered in the event of fire or flood, theft from gardens or outbuildings may not be covered.
He said: “Most insurance companies have a limit to the amount of cash that is covered, and this often varies depending on the different policies they offer.
“If you must keep cash in the home, make sure it is stored safely in your home, and check the limit you are covered for shown in your policy documents.”
There are safer ways you can manage your money without having to draw wads of cash out of the bank.
Other ways to save
Opening a Monzo bank account could help you save online with its money pots.
Monzo money pots offer a new way to save, customers can round up transactions to add spare change to pots automatically and schedule monthly savings deposits to stay on track.
The banking app divides your spending into categories – so you can see exactly where you’re spending (or wasting) your money.
Helpfully, you can even set targets for each category so you can stay within your budget – and it will alert you if you’re spending too much.
Opening a Monzo current account is free but there are some charges, such as for some cash withdrawals.
You can also open a bank account with challenger digital bank Starling in just three minutes using a selfie.
Just like Monzo, the app divides your spending into categories and gives you insights into your habits which can help you to budget.
Opening an account is free and you can also set saving goals.
Oval Money has a fun feature that allows you to save cash in its digital wallet based on your habits.
If you’re a serial social media user, for example, you can set up an alert to transfer money to your savings every time you post on Facebook.
The money goes into a digital savings account but you don’t earn interest. You can also invest the money, with Oval helping you understand the risks.
As always it’s good to shop around and find a method that best suits you.
You can find more information on the best budgeting apps and money-saving tips in our 48 ways to save money article.