UAE savings: How to save over AED5,000 using the viral ‘100 envelopes’ TikTok challenge

So envelope 12 would get AED12, envelope 32 would get AED32 and so on, adding up to a total of AED5,050 if one is able to complete the challenge over a period of 100 days.

While the challenge is proving an engaging way for many in the UAE to automatically save without even thinking about it – is it really effective? Here is what experts told Arabian Business.

100 envelopes: Does the viral TikTok savings challenge really work?

“This challenge is effective because it turns saving into a game, which can be more engaging and motivating. It benefits those who find traditional savings methods tedious and need a visual and interactive approach. People with some disposable income who struggle with maintaining consistent savings habits would find this challenge particularly useful,” Stuart Porter FPFS, Wealth Coach and Chartered Financial Planner said, adding that given the varied income levels in UAE, those trying out the challenge and can adjust the amounts in each envelope as per their financial situation.

Echoing the sentiment, personal finance expert Carol Glynn added that this mode of daily saving is seen by some as a more engaging and approachable way to save a lump sum than traditional monthly savings accounts.

It can help individuals be more aware of their money as they need to save every day, not just once a month, she explained, adding that this daily habit makes people think more about what they spend each day.

“Individuals who are likely to benefit most are those who thrive on structured challenges where they feel they can ‘win’ if they succeed. It’s just 100 days so it’s relatively short-term to reach your goal so people motivated by short-term gratification may enjoy it. It is also easy to do it with others also wanting to save money, creating more of a challenge and game and so it is more fun, with built in accountability,” she said.

Glynn added that saving in cash envelopes is a very “traditional method of saving” which many people prefer than saving in bank accounts. “Many people like to see their savings in cash and so the cash based, tangible manner of the challenge can be motivating and gratifying for them,” she said.

Getting started with the 100 envelopes challenge in UAE

To begin, Porter said, number envelopes from 1 to a limit like 50 or 100. If the numbers are too high, reduce them by halving the values for each envelope. Keep the envelopes somewhere protected and deposit the corresponding amount daily.

As an alternative, use a digital bank app to transfer the amounts to a savings account, this gets interest on your savings as extra money.

“The challenge takes 100 days if done daily, but you can extend it to several months or even a year if needed. Staying motivated can be achieved by tracking your progress visually, celebrating small milestones, and keeping the end goal in mind, such as a significant purchase or financial security,” he said.

If you decide to use this saving method for a year, you would save AED66,765. However, there are a few drawbacks to keeping hard cash in envelopes at homes, Glynn warned.

In 2023, TikTok users began a challenge called ‘cash stuffing’, which is a budgeting technique that helps cash-strapped individuals or households track their spending and savings, eliminating the need for a spreadsheet.

According to a report by The Guardian, while the budgeting approach grew popular on TikTok, where associated hashtags such as #cashstuffing received many views – home insurance companies received several claims where large sums of cash kept in envelopes got stolen during a break-in.

“The UAE is a low crime location and so the risk of cash being stolen from your home is lower than in other locations. However I would recommend participants to be careful and purchase a safe for example to store such large amounts of cash,” she said, adding that as UAE is also largely a “cashless society,” ensuring the right amount of cash every day can be “cumbersome.”

“I know I would struggle as I rarely carry cash. The cost of taking out cash every day from my bank account is also a consideration. It would eat into some of my savings goals! So using a digital version, such as transferring money into a savings account daily, could be more suitable and secure. You can do this by picking a number between 1 and 100 each day and transfer that amount into a bank account. Ideally one which also earns interest so your savings is earning interest straight away,” she said.

What are other alternatives to the 100 day savings challenge?

Both Porter and Glynn said while the 100 envelope method can make substantial difference to saving routine, staying motivated is key, and if consistent – the objective develops saving habit.

“To stay motivated, set a clear purpose for the money you’ll save. Why are you saving the money? What will you do with the money if you are successful? Ideas could be for an emergency fund, towards a holiday, to kick your house deposit savings habit, or to build a fund to start investing with. Whatever it is, make sure it’s something exciting for you to keep you focused and excited to work towards the total saved amount. Would building milestones along the 100 days help keep you motivated and focused? If yes, build them in,” Glynn said adding that after reaching a certain amount, treat yourself.

“Of course, make sure the milestone reward is enough to feel like a reward or a treat but doesn’t cost so much it derails your savings progress,” she advised.

Porter added that though targeting 100 days, the timeframe can extend to months or a year if needed as participants often continue saving afterwards as routine establishes.

“After completing the challenge, many participants continue saving because they have developed a habit of setting aside money regularly. The sense of accomplishment and improved financial discipline often encourages further savings towards other financial goals like an emergency fund, a down payment for a house, or retirement savings,” Porter said.

There are also other alternatives that could modify the method through using fewer envelopes, such as the 52-week savings challenge, where one saves an incrementally increasing amount each week, and the AED50 savings plan, where you save every AED50 note received, Porter said.

“These challenges can significantly improve savings habits by making saving a regular and engaging activity. Challenges like the 100-envelope method can make a substantial difference by establishing consistent saving routines and making the process enjoyable,” he said.

What are some mistakes to avoid during the savings challenge?

Both Porter and Glynn also explained that it is important for individuals to avoid setting unrealistic targets that could strain finances.

“Don’t neglect other financial responsibilities, like paying off debt or covering daily expenses. Also, be cautious about keeping large amounts of cash at home due to security risks,” Glynn said.

Porter advised that it is important for individuals to ensure the amounts are manageable and do not interfere with essential expenses.

“The objective is to develop a savings habit. More stretching targets can come later when you have some successes under your belt. Another common mistake is raiding the envelopes before the challenge is completed, which undermines the purpose of the exercise. Also, the envelopes must be kept in a secure location,” he concluded.