What Is the 100-Envelope Challenge, and How Can It Help You Grow Your Savings?

Growing their savings is a huge priority for a lot of people, and amidst the numerous ways to save, one particularly popular (and interesting!) method is what’s known as the “100-envelope challenge.”

“The envelope challenge is a fantastic money-saving method that has become popular on social media platforms,” says Bill Ryze, a Tennessee-based certified Chartered Financial consultant and a board advisor at financial services company Fiona.

This cash-saving experiment offers a great method to increase your savings in a fun, simple way. But what, exactly, is the 100-envelope challenge? How does it work? And how do you decide if it’s the right saving method for you? Let’s find out!

What is the 100-envelope challenge?

The envelope challenge is a cash savings method. “It involves 100 envelopes, numbered from 1 to 100,” says Ryze. “The objective is to save money by setting aside the daily dollar amount corresponding to the number on the envelope.”

So, for example, let’s say you’re on day 50. On said day, you would put $50 in cash into the envelope—and then seal the envelope and put it away for safe-keeping.

It may seem simple, but over time, the cash you put in the envelopes adds up. “You save over $5,050 in 100 days if you successfully complete the challenge,” says Ryze.

How to do the 100-envelope challenge?

So, how does the 100-envelope challenge work in practice? Here are the steps involved in this intriguing savings method:

1. Number the envelopes

“Take 100 envelopes and label them from one through 100,” says David Bakke, Finance Expert at DollarSanity. 

2. Choose one envelope each day

“Each day, pick up one envelope…and place money inside it corresponding to the number on the envelope,” says Ryze. While some people prefer to go in chronological order, there’s no “right” way to complete the envelope challenge; you could start with the 100th envelope and go in descending order or pick an envelope at random each day. 

3. Repeat for 100 days

From there, the challenge just continues with a new envelope each day. “Repeat the process every day for 100 days,” says Ryze. 

Once you’ve completed the 100-day envelope challenge, the final step is to tally up your savings! “On the 101st day, open all the envelopes and count your cash. It should be around $5,050,” says Ryze. 

100-envelope savings challenge: What are the benefits?

The main benefit of the 100-envelope challenge is, of course, saving money. However, its advantages could extend far beyond this primary goal, including other potential perks such as:

• It makes saving fun. The envelope challenge turns saving into a game—which, for many, can make the process of saving more fun and motivating. “This challenge simplifies and gamifies saving money,” says Ryze. “It motivates you to build a regular savings habit.”

• It can help you pay yourself first. As long as you’re putting your money into the envelopes each day, that’s cash you don’t have to spend elsewhere. Taking the cash out of your account—and essentially paying your savings account before anything else—can help you consistently build your savings over time.

• It adds up. In terms of savings, the envelope challenge can help you set aside a decent chunk of change—and do so quicker than you might have thought possible. “You can save a substantial amount in a relatively short period,” says Ryze.

What are the potential pitfalls?

While there’s no denying that the money envelope challenge can be a great way to save, it’s not without its potential pitfalls. Some disadvantages include:

• It’s not realistic for everyone. While the concept of the envelope challenge is solid, setting aside that much cash every day may not be realistic for some. “It assumes that you have this amount of money basically lying around that you can put into envelopes,” says Bakke. “Most regular folks don't.”

• It requires discipline. The envelope challenge requires you to deposit cash into an envelope every day—and doing anything every day requires discipline, which can be a struggle for many people.

• It only works if you don’t overspend elsewhere. The envelope challenge only works if you set aside cash—and don’t spend that money elsewhere. For example, if you’re putting cash into envelopes every day—but taking on more credit card debt to cover your expenses—the challenge isn’t going to help you.

Bottom line? While the envelope challenge is a great savings strategy for some, it may not be the right fit for others—so it’s important to take stock of your own financial situation and determine whether this challenge is realistic and helpful for you.

Tips for success

Considering giving the envelope challenge a try? Here are some tips to help you successfully navigate the challenge:

• Create a budget. You can’t save if you don’t have a clear understanding of how much money you make and how much money you spend. That’s why, before you get started with the challenge, it’s important to “create a budget,” says Ryze. “It enables you to see where your money is going.”

• Identify opportunities to save. In order to complete the envelope challenge, you need enough cash to fill all 100 envelopes. And in order to find that cash, you’ll want to look at your budget and find opportunities for savings (for example, by making coffee at home instead of grabbing a latte on the way to work). “Reduce your unnecessary spending and save cash to meet the challenge objectives,” says Ryze.

• Feel free to customize. While the traditional envelope challenge includes daily cash deposits into 100 envelopes (one envelope per day), if that structure doesn’t work for you, feel free to switch things up—and make the challenge work for you. “Customize it to suit your financial situation and goals,” says Ryze. “For instance, if saving $5,050 in 100 days is not feasible, you can reduce the amount and number the envelopes accordingly.”