Brilliant Idea: Make Saving As Fun As Gambling
Finally, an idea that just might work: get Americans to save by capitalizing on their desire to waste money! How? Buy turning saving into the lottery, of course!. Sound counter-intuitive? Consider this: in 2007 spend $92.3 billion on gambling while only saving $57.4 billion. Americans wasted almost twice as much money gambling as they saved!
Had Americans purchased 50% fewer lottery tickets, our national savings crisis would be be non-existent! Unfortunately, it seems most people choose to take the all-or-nothing approach to saving for retirement (gambling) rather than the slow-and-steady-but-reliable method (good ol’ fashioned saving). Harvard Business School professor Peter Tufano has a plan to change that.
Introducing The “Save To Win” Program
As implemented in several pilot programs in Michigan, “Save To Win“ is a cross between a CD and a raffle ticket. Basically, residents who put $25 or more into a “Save To Win” CD are entered into a monthly drawing for prizes worth up to $400 as well as a yearly drawing for a $100,000 jackpot. Obviously, such a silly idea could never work, especially since it would have to pay significantly below-average interest rates to fund all the prize giveaways, right? Wrong! So far, the program has attracted over $3 million in deposits.
I think it’s great that programs like this actually encourage people to save money, but I can’t help thinking how pathetic it is that we as a nation have to be induced to save by stupid psychological tricks. I mean come on, it’s $25 bucks. If you can afford a few cups of coffee and a lottery ticket, you can afford to save. I think we ought to spend more effort educating consumers about the benefits of saving and investing and less trying to trick them into doing something they don’t want to do.
What about you? Do you think the “Save To Win” program is a brilliant idea or a waste of time?
Tired of making excuses? Want to finally start saving some money? HSBC Direct is currently paying 1.45% on their high-yield online savings account (accurate 8-20-2009).
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I agree it’s a bit lame that we have to trick people into saving. That said, I think the idea is absolutely brilliant.
And in all fairness, I do things to “trick” myself all the time. For example, I trick myself into saving (via automatic IRA contributions), and I trick myself into working (by making distractions harder to access).