How the 100 Envelope Savings Challenge Can Help You Meet Your Savings Goals


A survey by The Motley Fool Ascent from July 2023 found that the typical American has $1,200 in their savings account. While having any money saved is a good thing, there’s no denying that it can be hard, especially when there are so many other financial obligations to consider. If you haven’t heard of it, the 100 Envelope Savings Challenge is one way to slip into the habit of saving one dollar at a time.

Introduced to the challenge

We all have that one person in our lives, the one who approaches personal finances like a surgeon preparing for an intricate operation. For me, it’s my niece. I’m pretty sure she began worrying about retirement when she was in middle school, which may be a bit much. However, that focus on finances has also made her hyper aware of how she handles money.

A few months ago, she mentioned that she and her husband are building up a fund for projects around the house, but they’re trying something new. They’re not depositing extra funds into a savings account. Instead, they’re participating in the 100 Envelope Savings Challenge.

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They have money in their checking account to pay bills, participate in employer-sponsored retirement plans, and save regularly. However, they feel as if the money in each account is already earmarked for other purposes and won’t dip into one of them to make cosmetic changes to their home.

My niece is also pretty allergic to debt, which makes me happy. However, that means she won’t put a non-necessity on a credit card or take out a personal loan for something she can live without. Enter, the 100 Envelope Savings Challenge.

How it works

The 100 Envelope Savings Challenge can be adjusted to work for you. My niece purchased an inexpensive notebook designed specifically for the challenge.

The notebook has 25 plastic pages, each with four small pockets (or envelopes). Each pocket is numbered from 1 to 100. On the first day, you slide $1 in pocket No. 1. On the second day, you place $2 in pocket No. 2, and so on, until all the pockets are filled. By the time you’ve filled them all, you have saved a total of $5,050.

Adjusting the challenge to fit your needs

I was curious enough to buy a challenge notebook. My husband and I have a wish list of projects we want to do with our yard this spring and summer, and like my niece, I won’t take money from another account. I’ve been adding bills for a few weeks now and have come up with a few insights:

  • If you’d rather not use a notebook, you can take on the same challenge using 100 separate envelopes. I considered going that route, but realized that using the notebook would keep things tidier.
  • You don’t have to add money every day. I don’t always have spare cash lying around, and taking money out of my checking account to feed the notebook defeats the purpose. The idea (for us) is to build up a fund without disrupting our normal monthly budget. We went out of town last weekend, and as is often the case, we returned home with a small pile of bills. I used some of those bills to fill a few empty pockets.
  • My niece tells me that using the notebook challenges her to stick with a household budget. She says when she comes in under budget in a specific category (like food or a utility bill), she uses that money to fill pockets.
  • It may be called the 100 Envelope Savings Challenge, but that doesn’t mean you’re expected to have all the pockets filled within 100 days. For some of us, it may take much longer, especially when we get past the No. 20 pocket.
  • You don’t have to go in order. For example, it’s okay to put a $5 bill into the No. 5 pocket before ever putting a $1 bill in the No. 1 pocket. It’s all about what cash you have available.
  • You can set your own goal. I know that once it’s filled, the notebook will hold $5,050, but I have no plans to save that much for yard projects. I would rather put the money into a high-yield savings account and earn interest. The only reason I don’t feel bad about putting cash for our yard projects into plastic pockets is that it will all be spent in a matter of weeks, and wouldn’t have had time to earn much interest anyway.

This challenge could be great for kids

On Monday, as I sat on the family room floor, neatly folding small bills and sliding them into pockets, I thought about how much fun my kids would have had with this when they were young. We could decide together what we should save for and keep careful track of our progress. It wouldn’t teach them anything about the importance of compound interest, but it would have helped get them into the habit of tucking extra money away.

If you’re looking for a way to meet a savings goal, doing it $1 at a time really can work.

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