Gen Z has rediscovered cash as a budgeting tool and is using it more than any other generation, according to a recent survey, amid a two-year inflation spike that devastated households.
Nearly 70% of Gen Zers use more cash than they did 12 months ago, according to one study. Credit Karma Online Survey Of the 2,118 adults, there are 331 Generation Z adults aged 18-26. This percentage was higher than any other group, including 47% for Generation X and 37% for baby boomers. In Credit Karma, Generation X is classified as born between 1965 and 1980, and baby boomers as he was born between 1946 and 1964.
One of the main reasons people, especially Generation Z with limited incomes, rely on cash to cope with high inflation, stock market volatility and rising interest rates that drive up credit card fees is budgeting. It’s the way.
“People who are struggling to maintain their livelihoods are trying to reverse this trend by not adding to their debt,” said Courtney Alleb, consumer finance advocate at Credit Karma. “That’s where budgeting techniques like ‘cash stuffing’ come in. ”
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What is Cash Stuffing?
Cash stuffing means setting aside cash at the beginning of each month for various categories of expenses such as groceries, clothing, and entertainment. Allotted to each category is all you can spend that month.
The strategy became popular, especially among Generation Z, after TikTok influencers talked about using it to curb their spending. According to Credit Karma, 72% of Gen Z adults are accustomed to cramming cash, with 30% of them using cash for budgeting (47%) and saving (55%).
Since starting cash stuffing, 89% of Gen Z cash stuffers have been able to put more money into their savings. An additional 70% said they were able to reduce their monthly spending, according to the survey.
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Is cash stuffing new?
Young people think they’re on the cutting edge and like to make fun of the Boomers, but they’re not.
“The reason I use cash is because it’s easier to budget,” said Eric Ma, 62, president of Jim Electric in Chicago, Illinois. “I’m an old-fashioned person and I use cash for most of my purchases. Having cash gives me more control over my daily expenses.”
Sound familiar? boom!
“My family has also been a victim of credit card theft, counterfeit checks, and identity theft, so we try to minimize our digital footprint,” says Mark, who uses PayPal for certain purchases. said. But he also added, “I don’t have a debit card and rarely use ATMs. I’m not ready for digital payment technology.”
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But is your credit card balance increasing?
yes.
Credit card balances exploded to $986 billion late last year, the highest level since 1999 when the New York Federal Reserve began collecting this data. Debt skyrocketed as people tried to keep up with inflation and rising interest rates. Credit Karma’s Aleph doesn’t think this contradicts the increased use of cash.
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Americans, especially young people, are seeing their credit card debt balloon and are looking for ways to limit it. Using more cash is one way he does it. Nearly 20% of Gen Zers say they are more cautious about spending when they have cash, according to the survey. Of Gen Z who pay in US dollars, 64% said they spent less, indicating that “cash is a great bookkeeping tool, especially for those who tend to overspend using debit cards and credit.” It shows that,” said Aleb.
Should I stop using credit cards altogether?
No, don’t hang up your credit card yet!
“Keep working on building your credit,” says Areb. “It’s as simple as setting up a monthly subscription with one credit her card and paying at the end of the month, or using one card to pay for gas,” she said. “It’s important to build credit so that you can take advantage of better-priced financial products in the future, such as auto loans and mortgages.”
