Imagine your child is leaving for college tomorrow. Have you prepared her for the culture of ‘buy now pay later’ and the onslaught of marketing aimed to convince her that she needs this or that to be happy? How about the peer pressure she’ll face because seemingly everyone around her is spending money uncontrollably and leading lives of luxury and popularity.
If she doesn’t learn the fundamentals of financial health, she will fall prey to the financial disaster of going with the flow of society. The hard truth is that everyone wants her money. So, if she doesn’t have a plan for her money, her money will end up in the hands of someone who does have a plan.
Money touches virtually every part of our lives, so learning how to properly manage it is paramount. How can you empower your child with the essential life skills she needs to thrive in a complex financial world?
Cash Stuffing
Cash stuffing is a simple, hands-on method that can make money management fun and effective for kids. It equips them with essential life skills and sets the foundation for financial responsibility.
If you haven’t heard of it before, cash stuffing involves allocating money into different envelopes designated for specific goals. If your child is a teenager, she may have an envelope for college savings, fuel, eating out, and her favorite hobby. These envelopes will help her save for and purchase the things she needs and wants.
One of the significant benefits of cash stuffing is its ability to teach children financial responsibility from an early age, and it can never be too early! In fact, according to some researchers, money habits start developing as early as 7 years.
Although using physical cash long term isn’t practical, we recommend you start your child with the traditional physical cash stuffing method because of the benefits of hands-on learning. At the end of this article we will share a digital solution for cash stuffing that makes it an easy life-long solution.
Financial health isn’t a goal, it is a way of life.
Benefits of Cash Stuffing
The most important benefit of cash stuffing is how it systemizes financial health. James Clear, the author of ‘Atomic Habits’ said “People don’t rise to the level of their goals, they fall to the level of their systems.” The four fundamentals of a financial health system are:
- Plan your money
- Follow your plan
- Analyze your results
- Rinse and repeat
Earth shattering, isn’t it. 🙂
Cash stuffing offers an excellent opportunity for your child to develop essential money management skills. She will learn how to budget, save, and set financial goals. As she tracks her spending and allocates money to specific envelopes, she’ll gain practical experience in handling money and making informed choices. She’ll learn to prioritize her needs and wants. She’ll become accountable for managing her own money and understand the consequences of overspending.
Spending from envelopes will also help her understand the value of money, the importance of setting aside a specific amount for long-term goals first, and the joy of generosity. It will teach her the importance of delayed gratification and the joy of accomplishment. These skills will empower her to become confident and responsible with her finances and lay a strong foundation for responsible financial behavior in the future. What parent doesn’t want that for their children?
Talk about setting your child up for a life of financial success!
Start Cash Stuffing
Implementing cash stuffing with children can be a lot of fun. Here are some practical tips to help you out:
- Create envelope categories: Start with categories that are exciting for your child and make sure they are age-appropriate.
- Examples of spending categories include: games, treats, birthday gifts, souvenirs, lego sets, etc. Get creative!
- Save for long-term goals first: Help your child create an envelope for a long-term goal. Set an achievable goal and create a visual that gets her excited about it.
- Examples: cars, college, house, travel, etc. Be excited!
- Hold a weekly finance date: Plan a time (weekly at first) to talk about money, budgeting, goals and financial decision-making. You might do this at your local Dutch Bros or over homemade pancakes on Saturday morning.
Wrap up
Cash stuffing as a practical and effective method to give your child the financial knowledge and skills she needs to thrive in the world of personal finance. To get started, all you need are some envelopes, markers, and some cash. Doing so just might set her on a path of financial health that will become one of the greatest blessings of your life.
Want more ideas on how you can help set your children up for financial success? Qube Money offers digital cash stuffing for families. Click here to learn more.
*Qube is not a bank and banking services are provided by Choice Financial Group, Member FDIC.
