Looking for a fun and effective way to boost your savings? You’re going to love the 100 envelope challenge! This fun and not so difficult savings method is incredibly rewarding and only takes 100 days to complete. The idea is straightforward: you label 100 envelopes from $1 to $100 and then challenge yourself to fill them all over the next 100 days. By the end of the challenge, you’ll have saved a whopping $5,050!
What makes the 100 envelope challenge so interesting is it’s random number drawing each day. You get to wake up and surprise yourself with a dollar amount to save. Sometimes it’s an easy number and sometimes hard, but at the end you’ll be glad you completed the whole challenge. Whether you’re trying to boost your emergency fund or kick off your journey to become a Roth IRA millionaire, this is a great challenge to save a bunch of money in a just a few months.
What is the 100 envelope challenge?
The 100 envelope challenge is a fun way to save money quickly. It’s a self-directed game people use to accelerate progress on any of their biggest money goals.
We’re all about gamifying your finances, and the 100 envelope challenge helps you save just over $5,000 ($5,050 to be exact) over the course of 100 days!
Plus, having a fun challenge to work for forces you to think about your money every day. It gives you something to weigh your purchases against, resulting in more mindful spending!
How to do the 100 envelope challenge:
It’s probably one the easiest money challenges to set up… You can get everything ready in about 15 minutes, and all you need are some envelopes, a savings account, and a good attitude!
Step 1: Grab some envelopes. 100 of them to be exact!
Step 2: Label the envelopes. Grab your envelopes and label them 1-100. You can get as creative here as you want. Turn it into a fun activity with some colored pencils or glitter pens. You can even get your kids involved if you have them!
Step 3: Mix ‘em all up. Randomly shuffle all the envelopes and place them face down. You could also place them in a box and shake it up.
Step 4: Pull out 1 Envelope. On the first day of the challenge, select 1 envelope and look at the number on the front.
Step 5: Get Out Your Wallet. Whatever the number is on the envelope, stick that amount of cash into the envelope, and set it aside in another box.
Step 6: Rinse and Repeat. Keep going, every day. Select 1 new envelope from the original pile, put cash into it, and move it to the completed pile. After you’ve slipped cash into all 100 of the envelopes, the challenge is complete!
Variations of the envelope challenge to try:
The best part about money challenges is that with a little creativity, you can totally make them your own. You are the game commissioner, participant, and also the judge! (and hopefully – winner!)
Here are a few fun variations of the envelope challenge to try…
Pick Fewer Envelopes
If you don’t quite have the cash to fund 7 envelopes a week, you can totally cut down to 1 or 2 envelopes a week. Pulling 2 envelopes per week means you’ll have just over 5k in one year instead of 100 days.
Go Cashless
Not everyone likes to carry cash these days, myself included! But that doesn’t mean you can’t participate in this challenge. Just make digital transfers each day to your High Yield Savings Account to earn some extra interest on that resting cash.
Change the Number of Days
You can do this challenge for as many days as you want. Just adjust the envelopes so that the highest amount is equal to the number of days for the challenge. If you really want to save a higher amount of money, you could do this challenge for a full year (that equates to $66,795 btw!!!)
Challenge Your Friends
Money challenges are ALWAYS more fun when done with others. Encourage your friends and family to save more by joining you in this money challenge.
What should you do with your extra money?
Okay, I lied. The best part of any challenge is deciding what to do with all of your extra savings at the end. And since it’s your challenge, YOU get to decide where to put your $5k.
Here are a few ideas on what you can do with the money from your challenge.
Put it in a Roth IRA
If you want to make your money work for you, why not invest it in a Roth IRA? This magical investment vehicle allows your money to grow tax free, and also you can withdraw everything tax free at the age of 59 ½. This is a killer choice!
Start an Emergency Fund
Having cash on hand for a rainy day can help to make sure that you’re prepared to handle any financial emergencies. Plus, you’ll also be able to enjoy peace of mind knowing that you’re covered. Why not use your extra cash to start or pad your emergency fund?
Put it Towards a Big Trip
Do you dream of seeing the world? You can go on a pretty bougie trip with $5,050, even if you’re bringing your family along!
Pro Tip– Start accruing credit card travel rewards to offset some (or all) of your travel cost and stretch your money even further!
The Bottom Line:
The 100 envelope challenge is a way to abruptly change your daily spending habits and save a bunch of cash in a short amount of time. You can then use that money to address whatever money goals you’re passionate about.
Money challenges actually work because they make boring tasks FUN. They also help you prove to yourself that what seems like an impossible task is actually something you are completely capable of. Getting those small daily wins under your belt can motivate you to take on those even bigger money goals in life!
Soooo…. What are you going to do with your $5k?
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