How banks can leverage Gen Z’s growing ‘cash stuffing’ trend

The news: Social media influencers have helped lead Gen Zers back to cash. Now 23% of these young consumers use it almost exclusively, according to an online HarrisPoll of 2,118 US and UK adults in 2023.

What “cash stuffing” entails: Gen Zers are withdrawing large amounts of cash and budgeting by putting it into envelopes, according to Newsweek.

• The envelopes are organized and labeled as specific "buckets" for various expenditures.
• The consumers’ primary aim is to gain better control over spending by physically visualizing and allocating money for specific purposes. 
• Once the consumer has exhausted the cash in a particular envelope, they stop spending in that category until the next cash infusion. This helps set limits on discretionary spending.

How we got here: This digitally native generation is accustomed to managing many aspects of their lives online, but digital payments facilitate this generation’s emotional spending habit—something 59% of them admit to struggling with.

• As a result, Gen Zers’ use of cash has increased since 2022.
• Though they crave a more tangible way of getting their financial lives on track, they haven’t gone full analog. Some major TikTok influencers have helped the cash-stuffing trend take off. 
• Newsweek reports that cash-friendly TikTokers Monets Money and CDN Cash Stuffer Girl each have millions of likes and views, demonstrating the widespread appeal of such advice.

What this trend means for banks: Financial institutions (FIs) that want to get in on this trend need to rethink three key strategies:

• ATM location: If they’re a digital-only bank or have closed lots of physical locations, they should consider covering customers’ ATM fees, at least up to a certain threshold. Figuring out which accounts Gen Zers gravitate toward can help FIs determine if this benefit should be universal or solely target cash-reliant consumers.
• Savings products: To reduce Gen Zers’ temptation toward emotional spending, FIs should educate them about accounts like CDs that require their money to be stashed away for a specified period of time, but that offer higher earnings at the end of that period. A bonus: Unlike the envelope in their drawer, such accounts are FDIC-insured.
• Professional advice: Banks can demonstrate their familiarity with Gen Z’s trending habits by encouraging young consumers to bring in leftover cash at the end of the month and connecting them with in-house budgeting tools and services.

Also, Gen Zers really want to boost their credit scores as a tangible measure of financial health. Explaining that they can’t really do that if their funds are all cash, educating them about credit scores, and referring them to internal score-boosting products could improve their loyalty and make them feel better understood.