The 100 Envelopes Challenge Promises to Help You Save $5,000. It Will Also Cost You

In the midst of a looming global recession and the U.S.’ all-time high inflation levels, TikTok’s latest saving hack, the “100 Envelopes Challenge,” promises to help users save up to $5,000 by stashing cash in labeled envelopes over the course of 100 days.

The benefit of the 100 Envelopes Challenge is that it starts small and encourages constant, conscious saving that builds quickly. But the trend—and the internet’s obsession with buying “aesthetic” envelopes for it—may not be the most effective way to put away money, according to financial experts.

How the 100 Envelopes Challenge works

The saving hack, with a hashtag that’s gained over 150 million views on TikTok, asks users to label envelopes 1 through 100 with the intention of chronologically filling up each envelope with the dollar amount of said envelope. In other words, on Day 50, you’d grab envelope 50 and put $50 in it. By the end of the 100 days—if you can afford it—you will have saved $5,050.

Since starting in July 2021, Jasmine Taylor, founder of Baddies & Budgets, has completed it three times, saving over $15,000. With that money she’s been able to pay off her student loans, max out her retirement Roth IRA account for this year and start a downpayment of her first home. Her YouTube channel’s most popular video, with nearly 400,000 views, showcases her unstuffing hundreds of banknotes of her completion of the 100 Envelopes Challenge. “This is doable!” she tells her viewers in the video.

Taylor recommends for those with smaller budgets who can’t save for 100 days in a row (or afford to set aside more than $2,500 in the final month of the challenge) to put cash in two envelopes per week. For those who can’t put the exact amount the envelope calls for, she recommends whatever amount you can. Another popular method is choosing envelope numbers at random, rather than chronologically.

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“The challenge can seem daunting at first, but once you get going you start seeing the money adding up and you see it’s a fun, less monotonous and effective way to get your money saved,” Taylor tells TIME. Her biggest advice: get started as soon as you can. “Get the first couple of dollars in there and before you know it, you’re 100 envelopes down.”

The cost of saving

But this method of saving money is likely not what will give your savings the most value, according to Patrick Di Cesare, a certified financial education instructor. “It’s a creative way to save money, but having cash stored away is like burying it in your yard or under your mattress. It’s potentially losing its value at a rate of 6.5% per year.”

Instead, Di Cesare advises that once you’ve built an emergency savings fund and paid off your high interest or personal loan debt, you should prioritize saving in a high-yield savings account or investing it. Some savings accounts can earn up to 4% interest per year, and will help the cash grow over time. The sooner people get their money into savings accounts and out of hard cash, the more it will grow, he says.

Jen Hemphill, accredited financial counselor and host of Her Dinero Matters Podcast, understands the drawbacks, but believes the psychological component of the challenge could outweigh the concerns about inflation and losing out on interest for some people. “Saving challenges like this give people accountability and this one is fun, visual and provides a sense of gamification,” she says. Hemphill recommends making the challenge your own and depositing cash into a high yield savings account as you go along, she says.

Baddies & Budgets influencer Taylor says the accountability “hack” of saving every day can particularly help those who have struggled to save in the past. “The cash envelope method isn’t necessarily for wealth management or those who already have their finances together. It’s for people looking to take hold of their finances and their relationship with money.”

Emulating the internet’s “aesthetic” version of the challenge can also potentially cost you more than just a pack of manila envelopes. Taylor recommends using a fireproof safe to store your cash.

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To get more motivated to complete the challenge, Taylor decided to D-I-Y her own set of PVC plastic, clear envelopes that gave her a clear view of every dollar bill she was setting aside. They’re now available for purchase on her website and have become so popular she’s having a hard time keeping up with orders. But, they also cost $49.90, plus shipping and handling.

“When things are aesthetic and pretty, dealing with budgeting your finances is a little easier to do,” she says. “But I understand that being able to purchase things from small businesses might be a luxury, so in any case you have to do what you can with what you have.”

Motivation to save

Ashley Johnson, a systems data analyst based in Ohio, made her own set of bedazzled envelopes and has decided every Wednesday she’ll grab an envelope and insert the dollar amount that corresponds with its label–starting with envelope 100 and working her way down to envelope one. So far she’s stuffed three envelopes, saving nearly $300 so far this year.

Her hope is that this saving hack will help her towards her financial goals of homeownership and potentially starting a homeless shelter. “It’s convenient and I don’t have to think about it,” she says. “I know at the end of it, I’ll have a guaranteed $5,050.”

Financial advisor Hemphill emphasizes whether you’re doing the 100 envelope challenge or not, you should get engaged with your finances and budgeting: “It could scare people, but it’s very important to stay in tune with your finances. Take baby steps and get started with where you’re at now.”