Guide to the Envelope Savings Challenge

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

That may seem like a lot to save in three months. But if someone follows the 100-envelope money challenge, they can actually save $5,050 by the end. Each day they’ll save a specific amount of money ranging from $1 to $100 — just increase the amount by $1 each day.

Q: How much money does the 100 Envelope Challenge save?

Over the course of the 100-day money challenge, savers will put aside between $1 and $100 every day. By the end of the challenge, they’ll have $5,050 saved.

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

When someone commits to the 100-envelope challenge, they have to put money aside every day for 100 days. They don’t know how much they need to save each day until they randomly pull an envelope with that day’s savings amount written on it.

Jacqueline DeMarcoUpdated February 25, 2023

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

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 / Days	Total 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

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.
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.
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?

Photo credit: iStock/MARHARYTA MARKO

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About the Author

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.

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