What is the Envelop Challenge?
The envelope budgeting method has evolved into a TikTok sensation, the concept was popularized by personal finance author Dave Ramsey. It involves dividing your take-home pay into spending categories (e.g., rent, utilities, et cetera), labeling an envelope for each category, and putting the cash you plan to spend into the envelopes.
However, it’s taken a different turn on Tiktok and has garnered millions of views as the “100 Envelop Challenge” and it’s been a sensation ever since. It’s a money-saving challenge, which promises to help people save over $5,000.
Here’s how it works:
You are required to label empty envelopes with the numbers 1 to 100.
- Chronologically fill up each envelope with the dollar amount of said envelope each day. In other words, on Day 50, you’d grab envelope 50 and put $50 in it. By the end of the 100 days, you will have saved $5,050.
Adapting the Envelop Challenge For Nigerians:
Given the equivalent current exchange rate of 1 dollar to naira, the average monthly income range from 80,000 to 150,000 Nigerian Naira, and the increasing expense for essentials in the lives of an average Nigerian, adapting this method to the current economic climate requires a different approach.
You can create your own envelopes and label in increments of 50 Naira. If you start from 50 Naira, you can progressively increase to 4,500 Naira on day 100, which will come to a total of N227,500.
Alternatively, opt for a digital approach using bank apps, beginning with N5 and progressing to N10, N15, N20, and beyond. After 100 days, you should amass a total of N25,250. Utilizing platforms like Cowrywise and Piggyvest can facilitate this process.
Now, how realistic is this money-saving challenge?
According to TIME, Jen Hemphill, accredited financial counselor and host of Her Dinero Matters Podcast, understands the drawbacks but believes the psychological component of the challenge could outweigh the concerns about inflation and losing out on interest for some people. “Saving challenges like this gives people accountability and this one is fun, visual, and provides a sense of gamification,” she says.
While Dough Flynn in an interview with CNN says “I’m all for whatever it takes to get people talking about saving money. That’s a good thing, but it’s gimmicky,” he said. “It’s laudable to try to put some money away, but it doesn’t feel very goal-oriented to me. What are you saving this money for?”
Whether you’re doing the 100 envelope challenge or not, you should get engaged with your finances and budgeting, and stay in tune with your finances. Take baby steps and get started with where you’re at now.
Simple steps to get started:
- Label 100 envelopes from 1 to 100: You can be as creative with this as you wish. Some people embrace their inner crafter and create colored envelopes with calligraphy. Others stick to classic white envelopes and a marker for numbering.
- Put your envelopes in a container: You can either keep them in numeric order or mix them up. Many people prefer to pick envelopes randomly to make the amount they save each day a surprise.
- Pick 1 envelope each day: The number on the envelope you choose is the amount of cash you should stick inside of it.
- Take stock of your savings: at the end of 100 days, you’ll have 100 envelopes containing a total of N227,500 or N25,250.
As Fidelity.com suggests, If the standard $5,000 or N227,500 target in 100 days isn’t feasible for you, consider adjusting the frequency of selecting envelopes, modifying the amounts associated with each envelope, or exploring alternatives like the 52-week money challenge.
If you’re looking to challenge yourself and supercharge your saver mindset despite the challenges, then this is it. The benefit of the 100 Envelopes Challenge is that it starts small and encourages constant, conscious saving that builds quickly.
Would you be taking on the challenge in a way that suits you?