Consumer Corner: Should I try the TikTok 100 Envelope Challenge to save money?

This is what is known as a ‘super trend’ but although it is popular, some financial experts express concern about doing it.

This trend has gained millions of fans and sees people putting away money every day in an envelope in a folder. It claims that someone will save €5,000 in 100 days by putting money into 100 envelopes.

These different ways of doing the challenge too. Some work it in such a way that on the first day you put a euro in the first envelope, the next day €2 will go into the next envelope and so on until the last day you put €100 in the last envelope.

Others take the approach that the envelopes are mixed up and you pick one at random and whatever number is on the envelope you put that amount of money in that envelope. The trend has been gaining massive momentum over the last year and there are now even products you can buy to help with your challenge such as branded folders and envelopes.

Many say that it is a fun way to encourage people to save money however financial expert, Frank Conway and founder of Money Whizz says that he thinks this TikTok trend is a “totally bonkers idea”.

“The simple logistics of managing 100 envelopes, nobody in their right mind would have the patience for that. In fact, if they were that disciplined and organised in the first place, they would not need the 100 envelopes to begin with.”

Mr Conway says that this is “nothing more than another TikTok trend.”

“It has not even given the slightest consideration to normal human behaviour, that most people don’t want to be corseted into financial straightjackets and enslaved to 100 envelopes of counting.

Plus, it also ignores that the cashless society is here to stay.”

He says that if you want to really save money, put it into a Credit Union or sign up for a pension, adding that the latter of the two will mean that it is definitely out of reach from the temptation of spending it as it will increase in value, is compound tax-free and he says “it’s the best financial decision a worker in Ireland can make.”

Of course trends will come and go but surely anything that encourages people to save money should be seen as a positive?

Savings, if someone can, should be encouraged and by all accounts this trend has managed to encourage many to do that. However there are many other ways to save money and ways to go about doing it.

Kevin Johnson, CEO of the Credit Union of Developmental advises that for anyone hoping to save money the first thing they should do is write down a detailed list of all income and expenditure they have and use this as a base for a Budget plan.

He says then to set aside some time to go through what you have spent, highlighting items of expenditure that you could cut down on or avoid entirely.

“Separate the expenses on your list into compulsory and discretionary spending. Tracking your expenses is the best way to become financially confident. Over time, you will see where improvements can be made such as taking the bus to work rather than driving or, batch-cooking meals instead of takeaway.

“It might be useful to review other providers for expenses such as credit cards, insurances, phone, and utilities, to ascertain if there are cheaper or better deals available by switching suppliers.”

He says that once you are aware of where cutbacks can be made, some money can be put into savings for unforeseen expenses that may arise.

“An extra tip when budgeting is the idea of the 50-30-20 rule in which you separate your expenses into three categories which are 50% for needs, 30% for wants and 20% for savings.

Or perhaps the ratio of 70-20-10 would be more suitable. Whatever ratio you choose, make sure you are putting part of your budget into a rainy-day fund, no matter how small. Over time, you will see the difference.”

One additional piece of advice for anyone hoping to save money is that debts should be prioritised in order of importance and expensive short term loans or credit cards are often the initial focus point.

“Credit cards are useful for those who have the financial discipline to operate them correctly, however, we would urge people not to be tempted to ‘stick it on their credit card’ and worry about payment at a later date.

Credit cards are an extremely expensive form of credit, the use of which has been to the financial detriment of many people,” says Mr Johnson.