Personal trainers and physical fitness coaches use something known as “gamification” to help clients reach their health and fitness goals. It is the process of setting small, achievable milestones so that each time one is achieved, it encourages you to move on to the next, to the next, etc., until you get where you want to be.
Financial advisors are taking a page from that playbook and are recommending that you use “gamification” to reach your financial goals. The idea is that people are more likely to meet their savings goals and stick to a budget if they can tap into their brain’s reward circuitry via small, incremental, and easily achievable “wins.”
While there’s a fine line to walk when applying a competitive mindset to personal finances, according to Forbes, there are studies that suggest that this can work. In 2016, when Walmart rolled out its MoneyCard prize-linked savings (PLS) program, they found that users ended up saving 35% more on average than the control group.
Furthermore, many apps with gamified elements claim pretty significant metrics of success. For example, Digit, an app that helps people automate their savings, notes on its website that it’s helped users collectively save more than $5 billion. The app costs $5 a month after a free trial. It offers gamification features including “savings bonuses”—extra cash deposited into users’ accounts based on their average daily balance over a three-month period.
Should I “Gamify” my Personal Finances?
The experts say that before you take this approach to personal finances, let’s not forget that the word “game” is at the root of “gamification,” and the term originated in getting rewards for “leveling up” video games. In other words, they could be a “downside” to playing with your finances as you would a video game, and some equate gamified financial apps as just another kind of online gambling. However, most gamified financial apps are relatively benign and focus on saving cents on the dollar and not creating lottery-like millionaire jackpots. Still, folks with a history of problematic gambling may want to steer clear anyway.
Forbes also says that there are a few ways to ensure that financial gamification aligns with your lifestyle and long-term goals. First, research any apps that ask you to connect your bank account or supply financial data. Watch tutorials to make sure you understand how to use the service. Read reviews, check Better Business Bureau ratings, and find out if financial journalists you trust have firsthand experience using the platforms.
How Does Gamification Help You Reach Long-Term Financial Goals?
Just how does gamification help you to reach your long-term financial goals?
Here are a few of the most common tactics and how you might apply them to your own savings or investment goals:
- Challenge yourself. If you’re not ultra-competitive but consider yourself “outcomes-oriented,” consider using an app like Acorns or Qapital to set goals and watch your savings grow.
- Compete against others. If you’re competitive by nature, choose an app like Twine that lets you track progress alongside friends and family.
- Seek out cash rewards. If you’re most motivated by cold, hard cash, an app like Digit or a bank program that hands out bonuses just for keeping funds in your account may be a way to make your money work for you.
- Build virtual worlds. If you’re the type who has spent countless hours tinkering in games like SimCity or Roblox, apps like Nestlings and Fortune City may entice you to make smart financial moves in order to advance your virtual characters’ storylines.
Gamification can put a unique spin on personal finances—an area many people consider dry or difficult to comprehend. For those seeking a way to level up their financial habits, adding a fun twist to traditional spending or saving may be worth exploring.