Here’s what’s wrong with the ‘100 envelope’ method and TikTok’s other viral savings challenges

If you’re having money problems, someone on TikTok has a solution.

Between “cash stuffing,” the “100 envelope” method or the “no-spend” challenge, there’s no shortage of suggestions to better your financial standing.

“The gamification can be kind of fun,” said Ted Rossman, senior industry analyst at Bankrate. But like any other quick fix, these can be hard to maintain over time, he added.

The “100 envelope” method suggests saving a dollar more each day for 100 days. On the first day you’ll set aside $1, then $2 the next day and so on, so by the end of the 100-day period, you will have more than $5,000 set aside.

The approach has proved so popular, there are now more than 1,000 specifically designed kits, trackers and binders dedicated to this money-savings trend for sale on Amazon.

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What to know before taking advice from TikTok

More young adults are also trying another envelope method, or “cash stuffing,” to stay on budget and out of debt.

The premise is simple: Spending money is divided up into envelopes representing your monthly expenses, such as groceries and gas. When the cash in one envelope is spent, you’re either done spending in that category for that month, or you need to borrow from another envelope.

Alternatively, the “no-spend” challenge advocates eliminating all nonessential purchases altogether for a week, a month or even a full year, and putting the money that would go otherwise go to Starbucks coffees, dinners out and new clothes toward a long-term financial goal.

“I would definitely stress walking before you run,” Rossman said.

Rather than hop on the latest extreme fad, which may be hard to sustain, “it comes back to setting a budget and setting expectations,” he said.

Budgeting can help to balance immediate, short-term and long-term needs, data from The Pew Charitable Trusts found, and automatic savings can reduce the effort required to rebuild savings.

Rossman advises having money regularly transferred from your paycheck to a savings account. “You’re less likely to miss what you don’t see,” he said.

Establishing such a routine is necessary for building wealth, other experts also say.

There’s no secret to successful money habits, added Matt Schulz, chief credit analyst at LendingTree and author of “Ask Questions, Save Money, Make More.”

“With diets or with money, sometimes these fads catch fire, but the truth is that success with eating healthy or saving money is just about doing the same boring things consistently over and over again over time,” Schulz said.

“It may not make for great TikTok content, but it really is the wisest way to go about doing things,” he added.

TikTok’s latest savings trends seem like a good idea “with a relatively low ceiling,” Schulz said, however, “if there’s ever been a time when you shouldn’t stick your money in a binder, it’s today when you can get 4% to 5% or more back in these high yield savings accounts.”

After a series of interest rate hikes from the Federal Reserve, some top-yielding online savings account rates are now paying even more than 5%, according to Bankrate.com — well above the rate of inflation.

For example, if you have $5,000 in a high-yield savings account earning 5%, you’ll make roughly $250 in interest in a year.

Stashing cash not only forfeits the best returns in decades, it also leave you vulnerable to theft and could forgo the protections that come with consumer banking.

Whether and to what extent you are covered in case of a burglary may depend on your home insurance policy, whereas banks are covered by the FDIC, which insures your money for up to $250,000 per depositor, per account ownership category.