Britons are being warned to “be wary” of certain savings challenges circulating on social media as some processes could do more harm than good.
According to TikTok data, the trend “savings challenge” is at an all-time high in the UK for 2024, with the majority of the people consuming that content (55 percent) aged between 18 and 24.
In this economy, Alice Leetham, financial expert at Moneyzine said: “It makes total sense that Gen Z would seek advice on saving. Many are feeling the squeeze, not least people who are just starting their careers and likely have a modest amount of disposable income.
“Gamifying saving can be a good way to inject some fun into what can be quite a sober process, so I commend anyone who can switch people’s mindsets on financial planning.”
However, she noted: “Having studied some of the challenges though, alarm bells do ring.”
Ms Leetham said that while some of the challenges may seem achievable “at first glance”, they can become quite impractical in practice.
She said: “These challenges feel akin to fad dieting. Something that can, at best, leave someone dissatisfied with the results, but at worst, can leave people feeling disaffected and not wanting to engage anymore.
“While bringing saving and debt reduction into the public conversation should be welcomed, we should already take everything we see online with a pinch of salt and do our own research around it.
“The 100 Envelope Challenge is one such example that should come under scrutiny.”
The 100 Envelope Challenge
The 100 Envelope Challenge requires saving an ever-increasing amount of money each day based on the number of days it is.
On day one, people save £1, and on day 100, people save £100. By the end of the challenge, people should have £5,050 saved.
Participants in this challenge are encouraged to use 100 envelopes or a folder to store their money as a physical reminder.
In the last 30 days, this challenge has attracted over six million views in the UK and sparked 555 posts about it.
Ms Leetham said: “The 100 envelope savings challenge is something that sounds entirely reasonable on the face of it, but when you look at how much money you’ll be expected to save each month you realise it’s ultimately futile unless you’ve got a lot of disposable income.”
For instance, if a person were to start this challenge in April, people would have to save the following amount each month:
- April 2024 – 30 days -£465
- May 2024 – 31 days – £1,426
- June 2024 – 30 days – £2,295
- July 2024 – nine days – £864
- Total – 100 days – £5,050.
Ms Leetham said: “Considering the average net monthly income in the UK is £2,297 according to ONS, I suspect you’d struggle to keep up with this challenge in June.
“The concept is a little akin to those 100-day sit-up challenges you see that promise rock-hard abs, only to leave you extremely sore and exhausted by the end of it.
“That’s not the only downside, though. Advising people to keep money in a physical folder might be a good physical reminder for people, but if you were to save that money in an online savings account, you would also benefit from the additional interest as well as your savings.”
Ms Leetham suggested people consider more “sustainable” alternatives, such as the 1p savings challenge.
To participate in this challenge, savers must set aside 1p on the first day, 2p on the second, 3p on the third – and so on. After a year of doing this, savers could end up with a £667.95 in savings pot.
Ms Leetham added: “Even if you’re late to the party and want to join in this year, it would only cost you around £40 to catch up.”
