Is TikTok's "100 Envelope Challenge" Clever...or Stupid?

pack of paper American one hundred dollar bills tied with an elastic band and lies in a white envelope

Photo: Getty Images

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.


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