Savings Plans — Does the Envelope Challenge Work? — Tally (2024)

If you’ve browsed any personal finance content, from TikTok to Twitter, you might’ve come across something called the envelope challenge. Or maybe you heard about it from a friend. Whatever the backstory, the idea of saving thousands of dollars in such a novel way no doubt caught your attention.

The initiative is also known as the 100-day money challenge, and it’s all about saving money by following a unique envelope system. But maybe you’re skeptical about whether it works, or you wonder if there are better strategies to help you save more. We’ll cover all this and more.

What is the envelope saving challenge?

The idea behind this money-saving challenge is simple. Gather 100 envelopes and label them with numbers one to one hundred. Then, shuffle the envelopes like a pack of cards and keep them in a box or container.

After this, the fun begins. For 100 days, take out an envelope at random every single day and save whatever the corresponding number tells you. Draw an envelope with the number three on it? You have to save $3 that day. That might sound easy enough — but draw number 95, and you’ll have to put away $95.

Part of the challenge’s appeal is how easy it is to get started and save a significant amount of cash. After all, the only things you need are a pen and a bunch of envelopes you can order on Amazon, right? Well, as we’ll soon reveal, it’s not quite that simple.

How much will you save with the envelope challenge?

Savings Plans — Does the Envelope Challenge Work? — Tally (1)

If you’re scratching your head trying to work out exactly how much you’d have at the end of the 100 days, we did the math. If you complete the challenge, you’ll net $5,050 before the 100 days are up.

Not a bad result. That’s a perfect amount for you to use as an emergency fund or even a significant contribution to a down payment.

However, we did say there’s a caveat to the challenge’s apparent simplicity. If you don’t have the disposable income to put this much money aside in the first place, the challenge won’t change that.

Considering the real median earnings for U.S. workers was $41,535 in 2020, and the personal saving rate was 13.7%, it’s fair to assume the average person saves about $5,690 annually. It’s doubtful that many people can afford to put almost all of this aside in just 100 days.

What is the difference between the 100 envelope challenge and the 52 envelope challenge?

There are a few challenge variations. One is the 52 envelope challenge (also known as the 52-week money challenge). With this challenge idea, you save a fixed amount over a year that proportionally increases with each week. In other words, you save $1 on week one, $2 on week two and so on.

You can also use numbered envelopes to complete the challenge or move the extra money from your bank account to a savings account. Either way, you’ll end up with an extra $1,378 at the end of the year — a lower dollar amount than the 100 envelope challenge, but still a decent amount of extra cash.

Is the envelope saving challenge a good idea?

Savings Plans — Does the Envelope Challenge Work? — Tally (2)

The 52 envelope challenge might be more achievable than the 100 envelope challenge, but does that mean it’s the best way to save? Not necessarily. All variants of the envelope challenge share the same drawbacks.

It’s not just that the average person lacks the capacity to put enough money aside. These challenges also fail to get to the root of why you might be struggling to save. It begs the question: What could you do to save more?

Steps to consider instead

Again, we’d never say that saving money is a bad thing, and if the envelope challenge helps you do that, then go for it. It’s certainly a fun way to build up a stash — but that doesn’t make it a fail-safe plan for creating a better financial future.

There are other financial goals to think about, and here are two that should be at the top of your priorities list.

Creating a budget

Ultimately, a dependable way meet your savings goals isn’t to follow some arbitrary guidelines about how much to save each day (or week) — it’s to create a budget. What are you spending your money on? Are there areas you can afford to spend less? Bearing all that in mind, how much can you manage to save?

To help you work this out, consider using a budgeting app like Mint. Connect your accounts in the app to automatically track spending. This can help you find ways to reduce your expenses.

For example, you might realize you’re spending too much on entertainment by paying for multiple streaming services and that canceling two of them would give you an extra $20 a month to save.

Pay off debt

When creating a budget, pay attention to where your money is going. And if you have debt, like credit cards or personal loans, you’ll need to contribute a certain amount of your income to make your monthly payments.

This affects how much you can afford to save, so paying off debt should be one of your priorities.

Whatever you do, try to make minimum payments on all your debts. But if you have anything left over, you can use it to follow the debt avalanche method: Identify the debt with the highest rate and throw any extra cash you have at paying that off first while making minimum payments on your other debts.

So, if you have a credit card with an APR of 23% and a personal loan with an APR of 17%, you’d pay the credit card off in full before you move on to the personal loan. And once they’re both paid in full, that’s when you can think about saving more.

Let’s seal the deal

Savings Plans — Does the Envelope Challenge Work? — Tally (4)

So, to participate in the envelope challenge or forfeit it and focus on different financial goals? Whatever you decide, don’t forget the importance of budgeting and paying off any debt.

If you currently have credit card debt, an extra tool that could help you pay it off as quickly and efficiently as possible is the Tally† credit card repayment app. To save you having to work out what you should pay off when Tally simply consolidates your higher-interest credit card debt into a single lower-interest line of credit. It’ll also manage all your payments to avoid unnecessary charges along the way.

To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.

Savings Plans — Does the Envelope Challenge Work? — Tally (2024)


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

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.

Does the 52-week money challenge work? ›

But know that this savings plan is effective, and it can help you sock away more than a thousand dollars in a year — $1,378 to be exact. You could build up even more if you put the funds in a high-yield savings account. Doing the challenge takes commitment, but it's easy to start.

How much will 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.

How to save $5000 in 6 months? ›

To save $5,000 in 6 months, you need to calculate how much money you need to set aside each month. First, determine the number of months in 6 months, which is 6. So, mathematically, you will need to save approximately $833 each month to reach your goal of $5,000 in 6 months.

What is the envelope budget trick? ›

Instead of having money set aside for each category in your head, or even scribbled on a paper somewhere, take one envelope for each expense category and mark it clearly. Now, put the exact amount of cash for this month in the envelope for each category. Do this with every expense category, and voila!

How much money is 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.

How can I save 10k in 6 months? ›

How I Saved $10,000 in Six Months
  1. Set goals & practice visualization. ...
  2. Have an abundance mindset. ...
  3. Stop lying to yourself & making excuses. ...
  4. Cut out the excess. ...
  5. Make automatic deposits. ...
  6. Use Mint. ...
  7. Invest in long-term happiness. ...
  8. Use extra money as extra savings, not extra spending.

How much is $1 a week for a year? ›

The 52-week money challenge is a savings method where you increase the amount you save by $1 every week for a year. So, you'll deposit $1 into your savings account during Week One, $2 during Week Two, and so on, until you reach Week 52 and deposit $52. Your total savings over the 52 weeks should total to $1,378.

What if I save $100 every 2 weeks for a year? ›

If you save $100 every two weeks for a year, you will have a total of $2,600 [1]. Here's the breakdown: There are 52 weeks in a year, and if you save every two weeks, you will save 26 times in a year. Each time you save $100, you will accumulate a total of $2,600 over the course of the year.

What is the 100 envelope saving hack? ›

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.

Is the 100-envelope challenge doable? ›

“This is doable!” she tells her viewers in the video. Taylor recommends for those with smaller budgets who can't save for 100 days in a row (or afford to set aside more than $2,500 in the final month of the challenge) to put cash in two envelopes per week.

How to save $10,000 envelope challenge? ›

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. By the end of 100 days, you would have saved $5,050, which can be used towards whatever MO savings step you are at.

How to save $1000000 in 5 years? ›

Saving a million dollars in five years requires an aggressive savings plan. Suppose you're starting from scratch and have no savings. You'd need to invest around $13,000 per month to save a million dollars in five years, assuming a 7% annual rate of return and 3% inflation rate.

How to save $10,000 in 12 months? ›

The easiest way to do this is by setting monthly savings goals. To save $10,000 in a year, you'll need to save about $833 each month, or around $192 per week. You can look through your budget for ways to reallocate more of your money toward savings.

Can I save $10,000 in 3 months? ›

Saving money depends on factors such as income streams, amount of debt and commitment to cutting back. If you set this goal, make sure to cut back on expenses and stick to your budget. If you follow these guidelines, it is possible to save $10,000 in three months.

How to do the 100 envelope challenge in 3 months? ›

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.

Is it possible to save $5,000 in 3 months? ›

There are 12 weeks in a 3-month timeline, which means there are 6 bi-weeks. In order to save $5,000 in three months, you'll need to save just over $833 every two weeks with your biweekly budget. If you're paid bi-weekly, you can easily compare your bi-weekly savings goal with your paycheck.

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 $10,000 in 100 envelopes? ›

On each envelope, write the day number and the amount you need to save for that day. 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.

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