What is the 100 envelope challenge and how do you do it? | Fidelity (2024)

Saving money can sometimes feel like eating your (financial) Brussels sprouts—good for you, but sometimes hard to get excited about. Enter: savings challenges, such as the viral 100-envelope challenge, which can kick your savings into high gear.

What is the 100-envelope challenge?

The 100-envelope challenge is a way to gamify saving money. Each day for 100 days, you'll set aside a predetermined dollar amount in different envelopes. After just over 3 months, you could have more than $5,000 saved.

How to do the 100-envelope challenge

Here's how to get started:

1. Label 100 envelopes from 1 to 100 You can be as creative with this as you wish. Some people embrace their inner crafter and create colored envelopes with calligraphy. Others stick to classic white envelopes and a marker for numbering. What's important is that you use each number only once. Prefer not to DIY this step? You can buy special 100-envelope challenge envelopes at online retailers.

2. Put your envelopes in a container You can either keep them in numeric order or mix them up. Many people prefer to pick envelopes randomly to make the amount they save each day a surprise.

3. Pick 1 envelope each day The number on the envelope you choose is the amount of cash you should stick inside of it. For instance, you'd put $3 inside envelope #3 and $98 inside envelope #98. After you put the proper amount of money in the envelope, seal it up and place it somewhere safe.

4. Take stock of your savings At the end of 100 days, you'll have 100 envelopes containing $5,050. That's right—1 + 2 + 3 + 4 and every other number through 100 equals just over $5,000.

An important note: If saving $5,000 in 100 days isn't feasible for you—which it likely isn't for many people—don't let the sticker shock dissuade you from participating at all. You can customize the 100-envelope challenge to fit your financial situation. That might mean picking out an envelope less often, like once or twice a week, or changing the dollar amounts associated with each. Maybe you'd halve the amount you put in an envelope each week. So envelope #3 would get $1.50 stashed inside instead of $3 while envelope #98 would get $49 instead of $98.

If customizing this challenge doesn't work for you but you're still in the mood for a fun challenge to save money, you might consider doing the 52-week money challenge. It'll still help you save money—more than $1,300—but it does so over the course of a year instead of 100 days.

5. Make good use of your envelope cash You could use your savings from this challenge to start your emergency fund, if you don't already have one, to finance a special savings goal (vacation, anyone?), or as the start for a large financial goal, like a home down payment, kid's college fund, debt repayment, or retirement savings. Not sure what you would do with a chunk of change that large? Check out our guide on what to do with $5,000.

When you complete your first 100 days (or however long you choose to complete the challenge), try not to stop there. Think of the 100-envelope challenge as a stepping stone in a lifelong savings journey. You can complete it again in the same way, change up the challenge for the next round, or try out another money-saving challenge to keep your excitement level high—and your savings too.

Advantages of the 100-envelope challenge

Saving a big chunk of cash in a short timePerhaps the biggest appeal of the 100-envelope challenge is that, if you follow it to the letter, you'll have set aside a hefty amount in a relatively short period of time. For some people, this may be substantially more than they otherwise would save over 3 months, and it could be just what they need to put themselves in a better financial position.

Supercharging a saver mindsetIf you're not a natural saver, the 100-envelope challenge could jump-start a savings habit—and make it feel like a game instead of a chore. Once you've established a practice of setting aside money every day for almost 3 and a half months, it'll be easier to do so going forward.

And it doesn't have to stop with you. If you have kids, you can have them join in the savings challenge fun. Depending on how old they are, they may be able to help you write numbers on the 100 envelopes, choose an envelope each day, count out the right amount of money to put inside, or help you track how much money you have saved overall. That way you're helping grow their financial literacy as you grow your savings.

Disadvantages of the 100-envelope challenge

The default design of the 100-envelope challenge may not work for youThe 100-envelope challenge isn't realistic for everyone. For instance, if your monthly essential expenses are already close to your monthly income, you might have too tight of a budget to afford to save this much. Fortunately, you can modify the 100-envelope challenge for your needs, and there are other savings challenges you can do if you like the framework and motivation a challenge provides.

The 100-envelope challenge requires a lot of cash on handWhile there's no denying the powerful visual of unpacking $5,000 worth of bills, if you're not used to carrying large amounts of cash, you may not feel comfortable storing that much in your home.

If that's the case, go digital. You could use a random number generator online to pick a number for you each day and then transfer the amount from your checking account to your savings account. You might also try a hybrid version where you use envelopes but deposit cash at your bank every week.

What is the 100 envelope challenge and how do you do it? | Fidelity (2024)


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