100 envelope challenge: Pros, cons & other budgeting tips

The 100 envelope challenge is a popular money-saving method that helps you set aside $5,050 in 100 days using small, incremental contributions.

Popularized by TikTok users, this gamified approach to saving breaks larger goals into smaller, more manageable pieces, which can make getting started feel less overwhelming.

Challenges that turn saving into a game can be fun, which is part of what makes this one so appealing. For some, it’s a simple way to build momentum and get started with saving, while also helping build money-saving habits that can support longer-term strategies over time.

That sense of progress can be especially helpful if your saving attempts have fallen flat in the past.

The 100 envelope challenge works by assigning a dollar amount from $1 to $100 to individual envelopes. Each time you select one, you save that exact amount, gradually building up to $5,050.

1. Start by gathering 100 envelopes and a pen. Label each envelope from 1 to 100. This creates the full range of savings amounts you’ll work through over the course of the challenge.
2. Pull one envelope randomly each day. Whatever number is written on the envelope is the amount of cash you put in the envelope. For example, if you pull envelope 27, put $27 in it. This randomness helps keep the process engaging and prevents it from feeling too routine.
3. Continue the process until all envelopes are filled. As the numbers increase, the daily amounts will vary, with some days requiring more than others. By the end of 100 days, you’ll have saved a total of $5,050.

Because the amounts vary, some days will feel easier than others, which can make the process feel more dynamic than saving a fixed amount on a set schedule.

If you aren't comfortable using cash, you can use an online random number generator instead of envelopes and electronically transfer the chosen amount into your savings account each day.

Or, if it's not feasible to save that much that fast, you can pull envelopes weekly instead of daily. No matter how you do it, the idea is to turn saving into an active process to make the habit stick.

You have several options for maximizing the money you’ve saved after completing the challenge. Making your saved money work for you is a great way to continue building on your savings.

How you use the money depends on your current financial priorities. If you’re carrying high-interest debt, putting this toward your balance could reduce the total interest you pay over time.

If your finances are more stable, building or strengthening an emergency fund can give you a buffer for unexpected expenses. From there, longer-term options like investing may become more relevant.

Consider placing it in a high-yield savings account, investing for long-term growth, paying down high-interest debt or meeting with a financial advisor to create a plan tailored to your goals. Here’s how they compare:

• High-yield savings: Keep funds accessible while earning more interest than a traditional savings account—a good option for short-term goals or an emergency fund.
• Investing: Grow your money over the long term through stocks, bonds or funds, with the potential for higher returns but more market risk.
• Pay off high-interest debt: Reduce interest payments and improve financial health, especially if you’re carrying balances like credit cards or short-term loans.
• Meet with a financial advisor: Get personalized guidance to prioritize your goals, build a plan and decide how this money fits into your broader financial strategy.

Money-saving challenges can be a great way to get into the habit of working with a budget. But while trendy challenges may work well as a starting point, they aren't always designed for long-term success. It's wise to consider their pros and cons.

Looking at both sides can help you decide whether this approach fits your current financial situation.

• Flexible options. Feel free to adjust challenges to fit your budget. For instance, with the 100 envelope challenge, you can save over a longer period or set smaller amounts.
• Visual motivation. Seeing your savings grow as the envelopes fill up can be a big motivator to keep going.
• Builds a habit. Committing to a daily or weekly challenge can create a saving habit. It becomes part of your routine.
• Gamifies saving. Turning savings into a fun challenge makes it feel like a game and provides a sense of accomplishment with each step.

• Has a short-term focus. Challenges are typically set up for a short period, such as a few months, so they may not build long-term savings goals as effectively as other methods.
• Affects day-to-day budgeting. Setting aside cash every day or week for a challenge may divert money from your other financial priorities, especially if funds are tight or unexpected needs pop up.
• You don't earn interest. Cash-based challenges don't benefit from earning interest, which is one reason they may be less effective over time than putting your money into an interest-bearing account like a high-yield savings account or certificate of deposit.

"A short-term budget challenge is a powerful tactic to reset spending behaviors," says Kelley Kahler, vice president of Thrivent's Money Canvas® program.

"The focused, time-bound nature of a challenge fosters self-awareness while training self-control and building momentum through small wins. Set your budget challenge to be difficult yet doable to promote sustainable habits, rather than a restrictive 'crash diet' for your wallet."

Money-saving challenges are a great way to motivate saving, but consistent, long-term strategies build good habits and work better than quick fixes.

To work strategic saving into your habits, identify long-term saving strategies that fit your most important goals. Whether you’re saving for an emergency fund, debt payoff, vacation, home purchase or retirement, budgeting turns saving into a habit while managing necessities and discretionary spending. Here are a few popular ways to save:

The pay yourself first strategy prioritizes savings by setting aside 20% of your income for savings and 80% for everything else. You can use automatic transfers to stay consistent—set it and forget it. If you have multiple goals, this method helps ensure your savings stay a priority while leaving flexibility for other needs.

The 50/30/20 budget allocates 50% of your income for essentials, 30% to discretionary spending like dining out and entertainment and 20% for savings or debt repayment. This balance can help you regularly contribute to savings while meeting daily needs and enjoying some flexibility. This budget lets you manage both immediate needs and future financial goals.

The 50/40/10 budget focuses on essentials (50%), savings, debt and investing (40%), with a smaller portion (10%) for discretionary spending. This method can help if you want to make steady progress toward big financial goals, such as building an emergency fund or paying down debt, while still having some flexible spending for fun. It can prioritize multiple goals around savings and financial growth.

The 75/15/10 budget is set up to prioritize necessities. It allocates 75% of income to essentials, 15% to investments like a 401(k) and 10% to savings for short-term goals. This budget may be especially helpful if you have large fixed expenses, such as housing or child care, but still want to build up savings gradually.

Zero-based budgeting assigns every dollar to a specific expense or savings goal, ensuring no money is unaccounted for. This approach may help if you want detailed control over your finances and need to prioritize goals carefully. Tracking each dollar can make it easier to see where to adjust to make progress on saving or debt-repayment goals, but it can be time-consuming.

The envelope method (also known as cash stuffing) sets aside cash for spending in different categories. This hands-on approach can help if you're looking to control overspending. It limits monthly purchases, by category, to the cash available in each envelope. Keeping discretionary spending in check frees up money for specific savings goals or paying down bad debts.

The 100 envelope challenge can be a great way to kickstart a savings habit and reach a specific goal. But for lasting financial success, look for a strategy that's sustainable and adaptable to your life.

A financial advisor can provide personalized guidance as you prioritize your goals, develop a budget and save for the future. Connect with a local Thrivent financial advisor to start building a strategy for life.