Is TikTok’s “100 Envelope Challenge” Clever . . . or Stupid?

If you’re on TikTok, you may have seen the “100 envelope challenge” videos.  The hashtag has accumulated more than 160 MILLION views.  There are several different versions, but here’s the idea:

You get 100 envelopes, and number them 1 to 100.  On Day #1, you put $1 into the first envelope . . . on Day #2, you put $2 into the second envelope . . . on Day #3, it’s $3 . . . and so on.  Until the 100th day, when you put $100 in.

By the end, you will have $5,050 in 100 envelopes.  It’s supposed to be an exercise to get you to save money . . . but the more you think about it, the less “clever” it seems.

1.  A lot of people barely make $5,000 in three months . . . so they don’t have the option of stuffing that loose cash into envelopes, since it’s needed for rent and food.  There’s no magic happening . . . you need to have the $5,000 to put in.

2.  It’s back-loaded.  So while it’s workable for the first few weeks . . . by the final week, you’ll need $679, which is about $100 a day.

3.  The money is not accruing interest.  You won’t earn a big amount of interest on that money in three months . . . but some online savings accounts are offering 3% interest these days.  On a full $5,000, that’s more than $12 a month.

4.  It’s risky to just have a bunch of envelopes of cash sitting around.  Especially if you’re broadcasting what you’re doing on social media.

So, this can be a nice way to FORCE yourself to save money, if you have a decent income and you’re just spending too much.  But even then, you’ll probably have to plan ahead for the expensive days at the end.

There’s also a BETTER version that a few people are doing.  It goes like this:

Number the 100 envelopes, and then drop them in a box.  Each WEEK, pick out TWO envelopes at random . . . and save the amount of money on just those two.

After 50 weeks . . . or about one year . . . you will have saved $5,050.  It’s more “fun” because you don’t know what two envelopes will come up each week.  Also, it’s more sustainable since, at most it’s $199 in one week, and the challenge is spread over a whole year.  And you SHOULD consider banking it.