Is The Envelope Savings Challenge Right For You?

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If you're feeling the pinch in your wallet these days, you're not alone. It seems the cost of living is going up all over the place, with shoppers shocked that small things like chicken breasts could cost a whopping $37, per CTV News.  Even the World Bank has warned that inflation, the pandemic, and the war in Ukraine could cause a global economic recession in 2023, per Reuters. Now more than ever is the time to be mindful about spending, budgeting, and figuring out ways to economize.


Setting financial goals is always a good idea, but it's not always a very fun or engaging activity. Enter stage right: a viral TikTok money-saving hack that has captured a lot of imaginations. It's called the 100 Envelope Challenge, and as seen here by TikTok user @BaddiesAndBudgets, it's a quick way to save over $5,000 in just 100 days. So how does it work? And is it right for you?

The 100 Envelope Challenge is a fun way to save spare change

If you've got a lot of spare cash on hand and a penchant for spending it unwisely on frivolities, perhaps the 100 Envelope Challenge is for you. According to Go Banking Rates, the challenge invites you to set aside 100 envelopes with the numbers 1 to 100 written on them. Every day, you pull out an envelope at random and insert the cash value written on the front. So if you pull out envelope number 36, that's how much moolah you stuff inside. In just over three months, you can have $5,050 saved. That's enough to make even the biggest spender pause and reflect! TikTok user @baddiesandbudgets says she saved $20,000 in 2021 doing this, and her account is full of videos that share fun tips and tricks to make the challenge part of your daily routine.


And you don't have to use just plain old envelopes and a sharpie. Amazon is selling some pretty fun kits that include the envelopes, a storage box, a space to write down your savings goal and a chart for tracking. This might sound like just the right financial hack for you, but you should definitely consider the drawbacks before embarking the challenge, and yes, there are some!

Not everyone will find the 100 Envelope Challenge feasible

There are a few reasons why the 100 Envelope Challenge might not be right for you. As Distractify points out, who carries all this cash in their purses anymore? As most purchases these days are made either via Apple Pay, in-app purchases, or on credit/debit, having $99 in your purse to stuff into an envelope seems a fanciful. CNBC reported that the COVID-19 global pandemic saw a steep decline in cash purchases, and even in cash being accepted at points of purchase anymore.


Distractify also points out that keeping cash in an envelope, rather than in a savings account or Roth IRA, robs that money of its potential interest-earning ability. There are many other ways to accumulate $5,050, and as popular Instagram account @HerFirst100k points out in several videos, opening a high-interest savings account is probably one of the better ideas, rather than letting your money accumulate dust in envelopes. Simplistically Living also points out that not everyone can save money like that every single day. So before you embark on this challenge, make sure this TikTok fad is something truly feasible for your financial needs and goals.