What Is the 100-Envelope Challenge?
The 100-envelope challenge is a money-saving strategy that originated on social media. It requires you to label envelopes 1 to 100, then pick an envelope each day for 100 days and put the corresponding amount of cash in the envelope you pull – like putting $5 in the envelope labeled 5. It’s a fun way to save money, and if you stick to the challenge, you can save over $5,000 in those 100 days.
Key Things to Know About the 100-Envelope Challenge
- The 100-envelope challenge is a technique that requires you to save specific amounts of money in envelopes numbered 1 to 100, corresponding to 100 days.
- You pick one envelope each day, either chronologically or randomly, to fill with cash. The amount you put in should equal the number listed on the envelope. For example, the envelope labeled 99 should be filled with $99.
- The total amount saved at the end of the 100-envelope challenge is $5,050.
- This challenge encourages you to save since it makes it a fun activity.
- If you find it impossible for you to save $5,050 in 100 days, you can do things like extend the challenge to 100 weeks or lower the savings goal for each envelope.
How to Do the 100-Envelope Challenge
1. Gather your supplies.
To complete the 100-envelope challenge, you will need the following supplies:
- 100 envelopes
- A pen/marker
- Physical cash
- A safe place to store your envelopes
2. Label your envelopes from 1 to 100.
Label each envelope with a number using your pen or marker, starting from 1 and ending with 100. You can get creative and decorate the envelopes if you want. Alternatively, you can buy envelopes specifically for the 100-envelope challenge from retailers online or possibly in stores.
3. Pick an envelope a day to fill it with cash.
Each day, pick an envelope and fill it with the amount of cash that corresponds with the number listed on the envelope. For example, the envelope labeled 5 will be filled with $5 and the envelope labeled 80 will be filled with $80. You can pick the envelopes in chronological order or randomly. By the end of the 100 days, you should have $5,050 in cash saved up.
4. Store your envelopes in a safe place.
Make sure you have a safe place to store your envelopes, such as a drawer, safe or box. If you prefer not to store cash in your home, you can do the challenge digitally by picking an envelope and transferring the amount written on the envelope from your checking to your savings account.
You could also use an online random number generator to see what amount you should transfer to your savings if you don’t want to use physical envelopes. You can then use a spreadsheet or budget app, like the WalletHub app, to keep track of your progress.
5. Come up with a good use for the money.
Figure out what you want to do with the money you save during this challenge. You can use it for short-term goals, like building an emergency fund, or make a contribution to a larger goal, such as starting a savings fund for your child’s college education.
Examples of uses for the money include:
- Emergency fund contribution
- Vacation fund
- Down payment for a car
- College fund contribution
- Retirement account contribution
- Partial down payment for a home
Advantages of the 100-Envelope Challenge
- Encourages you to save. The 100-envelope challenge turns saving into a fun game, which can keep you focused on trying to finish the challenge rather than finding ways to spend your money. Watching your savings stack up can also motivate you to keep going.
- You’ll have savings to use. Once you complete the savings challenge, you’ll have more than $5,000 saved up. You can use that money for things like setting up an emergency fund or taking a long-awaited vacation.
- Builds good habits. If you’ve never been a saver or if you’re not good at budgeting, this challenge can get you in the habit of laying out a spending plan so you can find money to save.
- Offers flexibility. This money-saving challenge can be adjusted to fit into your budget. The main goal of the challenge is to save money. So if it’s not feasible for you to save $5,000+ in 100 days, you can extend the time period or lower the savings goal. Even though the 100-envelope challenge offers flexibility for those who can’t afford to save that amount of money in a short period of time, it still may not work for everyone.
Disadvantages of the 100-Envelope Challenge
- Not realistic for everyone. Some people may have to use up all their income on their necessary expenses, leaving little to no money to save.
- You won’t earn interest. Since you are putting the money into physical envelopes instead of putting it in something like a savings or investment account, you are not earning interest.
- It requires physical cash. Not everyone will have easy access to cash. You may have to stop at an ATM multiple times to get physical cash. There’s also the risk of having the money lost or stolen.
- Less money for discretionary spending. You may have to cut back on non-essential spending to have enough money to complete the challenge.
Tips for Completing the 100-Envelope Challenge
Make a budget
Making a budget allows you to plan out your spending, so you can split up your income among your expenses. This way you can allocate some money for the challenge, while still making sure your necessary expenses are paid.
Reduce unnecessary spending
If you typically do not have much money left over from your paycheck after paying for your expenses, you should try to identify some non-essential areas where you can cut back on spending. Some examples can include limiting how often you dine out at restaurants and not making purchases from social media sites. You can use the money you save from your reduced spending for the challenge.
Increase your income
If your current income is not enough to help you save for the challenge, you can try working overtime or doing a side gig to increase your income. The additional money can boost your savings and help you finish the challenge faster.
Do the challenge with a partner
Enlist the help of a friend or family member who can keep you focused on the challenge and motivate you to keep going. You can even make this a competition between a group of friends to see who can complete the challenge the fastest.
Don’t stop saving once the challenge ends
You should continue saving even after you complete the challenge, though you probably can pick a savings goal that is not as constrained as the 100-envelope challenge. Financial experts recommend saving at least 20% of all your paychecks, but that percentage can vary based on your income and expenses.
Learn more tips for saving money.
WalletHub experts are widely quoted. Contact our media team to schedule an interview.