What Is the Envelope Savings Challenge? (2024)

What Is the Envelope Savings Challenge? (1)

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Saving money can be hard, which is why some people turn to savings challenges for structure and motivation. One popular challenge is the Envelope Saving Challenge. This involves saving a predetermined amount of money every day by tucking it into an envelope. Gamifying the habit of saving makes it intentional and even fun. In the end, players feel like they’ve won cash rather than merely setting it aside.Keep reading to learn how the envelope money savings challenge works and why this simple strategy can be so effective for some savers.

What Is the Envelope Challenge?

A money saving challenge with envelopes has been floating around for a while now. While it goes by different names, it’s commonly referred to as the Envelope Money Saving Challenge or simply the Envelope Challenge. Sometimes, it’s the 100-Envelope Challenge, or the 50-Envelope Challenge, or the 200-Envelope Challenge.Just gather a large number of envelopes, and write a different amount of money on each one. People typically start with $1, and then increase the amount by a dollar for each envelope. When the challenge begins, choose an envelope at random each day and save the amount of cash written on it. When you run out of envelopes, the challenge ends.A money envelope saving challenge is a great way to work toward a specific goal, such as paying off a personal loan early or saving enough to buy holiday presents without using a credit card.

How Does the Envelope Money Savings Challenge Work?

Let’s take a closer look at how the envelope challenge works. Let’s say someone decides on a 50-day challenge. They will take 50 envelopes and write a dollar amount on each. For day one, they may write $1. For day 28, it could be $28, and so on. Then the saver mixes up the envelopes and chooses one blindly each day. The amount written on the envelope tells them how much cash to deposit. Once the challenge ends, they can deposit all the money into a savings account or use it to make a purchase without turning to a credit card.Recommended: The Best Cash-Back Credit Cards

How Much Money Can You Save From the Envelope Challenge?

The amount saved during the envelope challenge depends on how many days you challenge yourself and how much money you deposit each day. Assuming you start with $1 and increase by $1 per day, you can see how much you’ll save with different durations in the table below. Note that these figures don’t count the interest your money can earn in a high-yield savings account.
Envelopes / DaysTotal Savings
25$325
50$1,275
100$5,050
200$20,100
You can use the following formula to figure out how much you’ll save with a different duration: (Last Envelope Number / 2) x (First Envelope Number + Last Envelope Number)If you want to try a 40-day challenge, the formula would look like this: (40/2) x (1+40) = $820It’s easy to see how this challenge can get quick results. If someone has a very motivating goal, like paying off their student loan debt early to avoid interest charges, this challenge can be very effective.Recommended: Comparing Money Market and Savings Accounts

Pros and Cons of the 100 Envelope Challenge

Before someone dives into an envelope money saving challenge, they may want to consider these advantages and disadvantages.

Pros of the Envelope Challenge

  • Motivating
  • Structured
  • Easy to follow
  • Helps you save large amounts of money in a short period of time

Cons of the Envelope Challenge

  • Developing healthier spending habits isn’t required
  • The challenge requires discipline and sacrifice to work
  • A higher income is helpful to complete the longer version of this challenge
  • It can be hard to stick to the challenge when the saver pulls a higher numbered envelope
Recommended: How to Save and Budget Money as a Server

Variations of the Envelope Challenge

The great thing about envelope money saving challenges is that you can customize it to your budget and needs.

Digital Envelope Challenge

If someone doesn’t want to keep a lot of cash on hand (or waste that many envelopes), they can copy the challenge digitally by using an online “random number generator” tool to decide how much money to transfer into their account each day. Or they can simply work their way toward completing the challenge in numerical order so they know exactly how much money to transfer into a savings account every day.

50 or 200 Envelope Challenge

As noted previously, the envelope challenge can last as long as you like: 50, 100, or 200 days. While 100 days is the most common length, 50 or 200 days are also popular. With final amounts ranging from $1,275 to over $20K, the duration will be set by the size of your savings goal. Is it a week’s vacation, or a new car?

Changing the Number of Days Per Week

Feel free to set your own rules for the challenge. If you have 112 days before your next vacation, you can create a custom 112-day envelope challenge. Recommended: Guide to Vacation Savings Accounts

Why Is Having Money Saved Up Important?

First, it’s important to have an emergency fund. If an unexpected expense arises, like a major car repair or medical bill, you won’t need to take on high-interest credit card debt to cover that cost.Having emergency savings tucked away also makes it less likely you’ll fall for predatory lending practices. Payday loans, for instance, have such high interest rates that the debt grows at a rapid rate and becomes very hard to pay off in full.

The Takeaway

The Envelope Saving Challenge is a great way to stick to a savings plan and set aside a large amount over a short period of time. Gamifying the habit of saving can make achieving a financial goal — like paying off a car loan or building an emergency fund — easier and faster. The key to making the envelope savings challenge work is to maintain your discipline every single day until the challenge ends.

3 Money Tips

  1. Checking accounts are ideal for everyday transactions but earn little or no interest. Savings accounts are better for storing and growing your money — they earn higher interest but often restrict how many withdrawals you can make per month.
  2. An emergency fund is a key financial safety net. Aim to have three- to six-months worth of living expenses tucked away in a separate account that earns interest, but allows you to access the money if needed (such as a high-yield savings account). In some situations, it may be appropriate to have up to 12 months of living expenses saved.
  3. To set up a simple monthly spending budget, consider the 50/30/20 rule. This involves splitting your after-tax income into three categories of spending: 50% on needs, 30% on wants, and 20% on savings.
Lantern can help you compare online savings accounts and find today’s best rate.

Frequently Asked Questions

How can I save $5,000 in 3 months with 100 envelopes?

How much money does the 100 Envelope Challenge save?

How often do you put in money during the 100-envelope challenge?

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About the Author

What Is the Envelope Savings Challenge? (3)

Jacqueline DeMarco

Jacqueline DeMarco is a personal finance writer and editor based in Southern California. While she spends the bulk of her time writing about complex financial issues, she also tackles a variety of subjects ranging from food to fashion to travel. Her work can be found across dozens of publications such as Credit Karma, LendingTree, Northwestern Mutual, The Everygirl, and Apartment Therapy.

What Is the Envelope Savings Challenge? (2024)

FAQs

How can I save $5000 in 3 months with 100 envelopes? ›

You can save over $5,000 in just over three months with the 100 envelope challenge. It works like this: Gather 100 envelopes and number them from 1 to 100. Each day, fill up one envelope with the amount of cash corresponding to the number on the envelope. You can fill up the envelopes in order or pick them at random.

How much money do you save with the 100 envelope challenge? ›

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.

What is the 100 envelope challenge equation? ›

The child genius had realised that if you group the numbers from 1 to 100 in pairs, the sum is equal to (1 + 100) + (2 + 99) + (3 + 98) + … In other words, 101 + 101 + 101 + … Since there are 50 pairs of numbers, the sum is 101 x 50 = 5050. The 100 envelope challenge is a way of saving £5050 in 25 weeks.

How to work the 100 envelope challenge? ›

The 100-envelope challenge is pretty straightforward: You take 100 envelopes, number each of them and then save the corresponding dollar amount in each envelope. For instance, you put $1 in “Envelope 1,” $2 in “Envelope 2,” and so on. By the end of 100 days, you'll have saved $5,050.

How to save $1,000 in 30 days? ›

Here are some fast steps you can take to turn your goal of saving $1,000 in one month into a financial reality.
  1. Track Your Expenses. ...
  2. Automate Your Savings. ...
  3. Cancel Your Subscriptions. ...
  4. Cancel Amazon Prime. ...
  5. Press Pause on Eating Out and Date Nights. ...
  6. Sell Your Unwanted Items. ...
  7. Start a Side Hustle To Bring in Extra Cash.
Sep 26, 2023

How does the 52 week envelope challenge work? ›

Match each week's savings amount with the number of the week in your challenge. In other words, you'll save $1 the first week, $2 the second week, $3 the third week, and so on until you put away $52 in week 52.

How to save 5 grand in 3 months? ›

How to Save $5000 in 3 Months [2024]
  1. Create a Budget and Plan.
  2. Pick up a Side Hustle.
  3. Sell Things Around Your Home.
  4. Refinance Debts.
  5. Cut Unnecessary Expenses.
  6. Reduce Living Expenses.
  7. Try an Envelope Savings Challenge.
  8. Use Cash Back Apps.
Apr 3, 2024

How much do you save with the 52 week challenge? ›

You'll end the challenge with over $1,300 saved If you successfully complete the 52-week money challenge, you'll have $1,378 set aside. You may have that earmarked for a specific financial goal —or you may choose to put it in a high-yield savings account as the start of emergency savings, if you don't already have one.

What is the envelope budget trick? ›

To begin, a good rule to follow is the 50/30/20 method: 50% of funds go to needs, 30% wants and 20% to financial goals. Make an envelope for each category that applies: rent, utilities, phone bill, gas, groceries, emergency, savings and leisure. Put aside cash in each envelope corresponding to the amount used.

What is the 100-envelope challenge biweekly? ›

Biweekly 100 envelope challenge

The 100 envelope challenge adds an element of surprise to your saving journey. Number envelopes from $1 to $100. Randomly pick two envelopes every two weeks and save the combined amount they represent. It's unpredictable and exciting!

What is the envelope challenge 10K in a year? ›

Stay motivated and on track to reach your $10K savings goal by tracking your progress. In this version of the challenge, each envelope has a different amount for you to choose from. As you save, color in 1 envelope a day for 100 days or 2 per week for 50 weeks.

How to save $4000 fast? ›

How to Save an Extra $4,000 a Year
  1. Step #1: Look at Your Budget. “The first step in being able to save is to do a deep dive into your budget. ...
  2. Step #2: Figure Out Where to Cut Spending. ...
  3. Step #3: Determine Where Most of Your Money Is Going. ...
  4. Step #4: Sexy Math. ...
  5. Step #5: Set Up Automatic Transfers. ...
  6. Extra Tips.
Jan 7, 2019

How to save $5000 biweekly? ›

The easiest way to do this is to “chunk” your savings contributions so they align with your pay schedule. For instance, if you're paid weekly, aim to save around $97 each week. If you're paid biweekly, aim for roughly $193 every paycheck. And if you're on a monthly pay schedule, try to save around $417 a month.

How to save $2000 in a month? ›

How to Save 2000 in a Month: 13 Methods
  1. Create a Budget to Start Saving Money. ...
  2. Set Savings Goals & Track Your Progress. ...
  3. Open a Separate Savings Account. ...
  4. Automate Your Savings. ...
  5. Cut Back on Utility Bills. ...
  6. Have a No-Spend Day to Save Money. ...
  7. Consider a Side Hustle. ...
  8. Avoid Lifestyle Creep to Save $2,000.
Apr 4, 2024

How much to save $5,000 in 3 months? ›

If you want to save $5000 in 3 months, you'll need to save $1,667 per month, $416 per week, or $60 per day. While these numbers might seem overwhelming at first, by sticking to your financial plan you can reach your goal faster than you think.

How to save up $5,000 dollars fast? ›

Here are eight ways to save $5,000 in a year with small, manageable steps.
  1. “Chunk” Your Savings. ...
  2. Automate Your Savings. ...
  3. Save in a High-Yield Saving Account. ...
  4. Track Your Cash Flow. ...
  5. Boost Your Earnings. ...
  6. Declutter for Cash. ...
  7. Evaluate Your Subscriptions. ...
  8. Challenge Yourself.
Feb 5, 2024

How to save $10,000 using envelopes? ›

For instance, on the first envelope, you would write "Day 1: $1" and on the second envelope "Day 2: $2", and so on all the way to Day 100: $100. Each day, you take the envelope for that day and put the designated amount of cash inside. You can then store the envelopes in a container until the end of the challenge.

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