Gen Z turns to 'brand new craze' to control their finances, expert says

A Credit Karma report finds Gen-Z adults are ditching credit cards and turning to an old-school budgeting method to finance their lives. 

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Co-host of "The Ramsey Show" Jade Warshaw broke down the simple saving solution called cash stuffing during her Wednesday appearance of "Mornings with Maria."

"Over here at Ramsey Solutions, we've been cash stuffing for the last 30 years. So it's really funny that this is taking over as a ‘brand-new craze,’" Warshaw began. 

"I'm glad that it is, though. It's super helpful. Basically, what they're doing is they're taking out their expenses that they've already budgeted a certain amount for, but they're taking it out in cash to make sure that they can stick to their budgeted item. And they're actually feeling the pain of these expenses. It helps you stick to your budget."

"They're looking at the state of personal finance right now, and they're seeing it's a hot trash mess,"

- Jade Warshaw, co-host of ‘The Ramsey Show’

In a world where online banking is the status quo, prioritizing the obtainment of cold hard cash can be difficult, but Gen Z continues to stick by this traditional strategy.

"Cash stuffing" is a saving system where an individual takes his/her income for the month, minus expenses, and then divides the cash into categorized envelopes. 

The individual is prompted with a "give," a "save," and a "spend" envelope, and whenever they bring money into the house, they are forced to divide their earnings into what they feel to be the most effective and sensible envelope option. 

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"I think that they're looking at the state of personal finance right now, and they're seeing it's a hot trash mess. Right. We've got more than 67% of people living paycheck to paycheck. They see that we've got $1T in credit card debt, and they're going, something needs to change. Maybe I can take control of my situation and do something a little bit better for my situation financially," she explained to FOX Business' Cheryl Casone. 

The personal finance expert continued, saying that she is "proud" of Gen Z for "taking control" of their budget. 

"Budgeting is the first step. And a lot of folks are starting to do that. Gen Zers are starting to do that. But taking it a step further and saying, how can I actually stick to this budget? Being able to pull out certain line items in cash to feel it for it not to just be digital ones and zeros on your bank account, but to actually feel the cash," Warshaw said.

"We know that when you spend cash, there's more friction. It lights up the pain centers of your brain. So, you know, I'm spending this money. And better yet, when the cash is gone, it's gone. It makes it virtually impossible to go over budget. So I'm proud of them."

Warshaw concluded, arguing that Gen Z is honing in on the "biggest benefit" of cash by being "in control" of their finances.

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"They want to reduce that friction as much as possible as vendors. But turning around and saying, no, I want to feel this purchase. I want to know what I'm spending, and I want to take control and be the one in the driver's seat. That's a very smart choice that these Gen Zers are making," she said, Wednesday.