A budgeting trend dubbed the “cash challenge” is gaining traction in South Korea. This trend, popular among Korean millennials and Gen Z, went viral in the U.S. last year as “cash stuffing” on TikTok and made its way to Korea a few months ago.
It has since been rapidly spreading on social media platforms such as YouTube, where participants eagerly share their cash-only spending experiences.
The cash challenge involves withdrawing cash from a bank account, the equivalent of one month’s worth of living expenses, and dividing it into different spending categories such as groceries, household essentials, and healthcare. The cash is then stored in a binder or envelope, which serves as a portable wallet. This allows individuals to manage their daily spending, as it restricts spending to the cash allotted in each category.
Any cash remaining after spending is saved in a separate “savings binder”, categorized by savings goals like travel, anniversaries, or personal treats. Some participants post videos of counting the cash they have saved, showcasing the results of their financial discipline.
The cash challenge helps cut down on unnecessary spending, as many individuals find that handing over physical cash makes them more aware of how much they are spending compared to using credit or debit cards. Using cash also offers more tax advantages, as cash payments qualify for a 30% deduction on receipts at the year’s end, double the deduction rate for credit card purchases.
The budgeting trend has taken off on YouTube, where young Koreans have been posting videos sharing their cash challenge experience. One YouTuber’s video explaining how the cash challenge works has racked up over 230,000 views in four months.
Experts say the cash challenge has gained momentum as young Koreans look for ways to curb spending amid a cost of living crisis. This trend aligns with the recent surge in budgeting hacks, including the “no-spend challenge”, which involves refraining from spending for a chosen period.
“It’s a kind of game created by consumers who face financial challenges of a struggling economy and rising inflation,” said Lee Young-ae, a consumer studies professor at Incheon National University. “It’s appealing because it offers dual benefits of cutting down expenses and the psychological reward of watching the money accumulate through savings.”
