What Is The 100 Envelope Challenge Trend & How To Win It

SHORT ANSWER: A 100 envelope challenge is a simple system to build substantial savings within just over three months and jump-start other savings goals. 

If you're like the majority of American families, you may struggle to save enough for retirement, a mortgage or other big savings goals. What if a simple savings plan could help you save over $5,000 in just over three months? That's the 100 envelope challenge. What is the 100 envelope challenge? It's a way to jump-start savings, build an emergency fund, create momentum for long-term savings and establish a habit of saving more. Read on to learn how to apply this savings strategy to your life and save more within three months. 

What is the 100 Envelope Challenge?

At its core, the 100 day envelope challenge is a way to simplify saving. You take 100 envelopes and number them from one to 100. Each day, you'll take out one envelope and put the amount in cash that's written on the envelope. That means you'll put $1 in “Envelope 1,” $2 in “Envelope 2,” and on through 100. At the end of 100 days, you'll have $5,050. Whether you want to stop spending or build a savings habit, the 100 envelope challenge can be a launchpad to changing habits and saving more. There are a few different ways to implement this. 

Chronological 100 Envelope Challenge

You can choose to do the 100 envelope challenge chronologically, building up your savings muscles, as you save $1 on day one, $2 on day 2, $3 on day 3, and so on. If you choose this option, in the first 31 days, you'll save $496, but that will increase steadily throughout the rest of the challenge. 

In month two, you'll need to save about $1,363, and by the end of the challenge, you'll need to save about $3,191 more. However, the 100 envelope challenge is about breaking those big numbers into daily, achievable tasks. 

Random 100 Envelope Challenge

As a second option, you can distribute savings goals more evenly across the months by selecting a random daily envelope. That means on day one, you might select envelope 22, and on day two, envelope 5 or envelope 100. While this could potentially push you to save more in one month, the chances are it should be more evenly distributed.

Digital 100 Envelope Challenge

Not everyone has cash on hand. While this isn't a traditional 100 envelope challenge, you could opt for a 100 envelope digital challenge. In that case, you might make 100 numbered cards and transfer the specified amount into a savings account designated for the challenge. Then, you'll choose a card each day and make the transfer. For example, if you choose the number 45, you'd transfer $45 that day into the savings account. 

How to Do the 100 Envelope Challenge

If you are ready to get started with the 100 envelope challenge, here are the steps to follow.

1. Choose a Challenge Structure

You can choose a random 100 envelope challenge, a chronological challenge or a digital challenge.

1. Prepare Your Materials

Get ready with envelopes and a pen to label them or designate a savings account (preferably a high-yield savings account) for the challenge.

1. Get the Envelope Ready

Number the envelopes from 1 to 100. If you're doing a digital challenge, number cards or slips of paper from 1 to 100. 

1. Decide Where You'll Store the Cash 

After you stuff each envelope, you'll need somewhere safe to store it. That could be a drawer in a private area of your home, a safe or any other safe place. If you're doing the online challenge, you just need to ensure you can easily make daily transfers to the account. 

1. Start the Challenge

Sometimes, the most difficult part is to just get started. Jump right in with your chosen strategy. 

1. Keep Going

Try to plan ahead to have enough cash on hand, but If you miss a day, don't beat yourself up. Try to make it up, or just keep going. 

1. Celebrate Your Accomplishment

When you reach day 100, it's time to celebrate! Maybe you've saved for specific goals like a downpayment on a home or to jumpstart your retirement savings. If you did the non-digital version of the challenge, it's time to decide whether to deposit those funds in a high-yield savings account, checking account, Roth IRA or other savings vehicle. 

Advantages of the 100 Envelope Challenge

There are many advantages to savings challenges, like the 100 envelope challenge. Try it today, and you might gain benefits such as:

• Jumpstart your savings: The 100 envelope challenge can be a great way to save a substantial sum in a relatively short time, setting you up to reach bigger financial goals.
• Shift your mindset: Achieving 100 days of savings is a significant accomplishment that can help you feel the rewards of savings. This achievement can motivate you to take on more savings challenges.
• It's doable: Financial advisors often talk about the 50-30-20 budget, but to go from not saving at all to saving 20% of your income can feel overwhelming. The 100 envelope challenge can be a stepping stone to realigning your budget priorities while giving you a head start. 
• It's fun: Setting and achieving a goal can be both rewarding and empowering. Consider doing the challenge with friends and supporting each other to make it more fun. 

Disadvantages of the 100 Envelope Challenge

While there are many advantages of the 100 envelope challenge, there are a few disadvantages, including:

• It's not achievable for everyone: For lower-income families or those living paycheck to paycheck, saving each day, especially when it reaches $50 to $100 daily, may not be achievable. In that case, consider a 50-envelope challenge or whatever number is doable for you, and restart when you finish it to keep hitting your goals. 
• You'll need a lot of cash: If you opt for a traditional 100 envelope challenge, you'll need a lot of cash available, something not everyone has. Otherwise, you'll have to make extra trips to the ATM to stock up, unless you do a digital challenge. 

Other Money Savings Challenges

Whether you finished the 100 envelope challenge or want to consider other savings challenges, there are many build your momentum. This includes:

• 52-week challenge: A softer version of the 100 envelope challenge, you'll save $1 the first week, $2 the second week, and on like that for a year. You can even do the 52-week challenge concurrently with other challenges. 
• No-spend challenge: With the no-spend challenge, you'll aim to eliminate discretionary spending for a period of time. 
• No-dining-out challenge: With the dining-out challenge, you'll eat at home or prepare your own food at home rather than dining out. 
• The pantry challenge: This is another food-expense challenge. With the pantry challenge, you'll aim to shop in your pantry before going to the grocery store for new ingredients. 

Should You Try the 100 Envelope Savings Challenge?

Don’t let the large amount of cash or a three-month-plus commitment stop you from doing the 100 envelope challenge. It can be a powerful tool and simple strategy to build an emergency fund, save money fast for a downpayment or jump-start big savings goals. You can try other savings goals and keep learning to save more. For example, learn how much you should spend on groceries and how much you can afford in rent. You can also check out the best budgeting apps and expense trackers or consider financial advisors.