New Law Turns Saving Money Into a Game

Why I Think It's a Great Idea

New Law Turns Retirement Saving Into a Game

Last fall, you read my blog about an idea that turns lottery tickets into a way that encourages low-income people to save. So, I'm excited to tell you about a new law: the American Savings Promotion Act.

The law is based on a program that started in Michigan in 2009. It works like this: Every time you deposit $25 into a bank account, you get a raffle ticket. And every month, one person wins $3,750.

In Michigan, 50,000 people who had never had a bank account opened one. They collectively deposited $100 million.

People realized the value of this concept: unlike money spent on lottery tickets, which is gone if you don’t win, this program lets you keep your $25, even if you lose the raffle!

The basis for this is called gamification: turning work into a game. It takes work to save money, but saving becomes easier – and you’re more likely to do it – when it becomes a game where you can win prizes.

Gamification occurs everywhere. You see it in workplaces, where employees are offered bonuses for great performance. Schoolchildren work extra-hard to get gold stars on their papers. And young adults do, well, just about anything, to get the prize their lovers otherwise withhold.

I'm thinking about this now because I was recently with my friend and colleague, Peter Diamandis, in San Diego, at TD Ameritrade's annual conference for financial advisors. We were both invited to speak to thousands of financial advisors there – me on how to deliver financial advice to women, and Peter on exponential technologies.

Peter co-founded Singularity University, where I'm a guest lecturer, graduate of their executive program, and investor. He’s the guy behind the X Prize Foundation, which is responsible for the world’s first successful private launch of a spaceship. Peter offered $10 million to whoever could do it first, and two dozen teams from around the world ended up spending $100 million collectively to win the prize.

A game launched the world’s private space industry.

This wasn’t the first time gamification led to massive technological breakthroughs. Charles Lindbergh flew across the Atlantic in the first-ever solo flight to win a $25,000 prize. In 1714, the British government offered a prize to anyone who could figure out a way to precisely determine a ship's longitude; it was won several years later by John Harrison. (Today, the Longitude Prize is being offered to anyone who figures out how to prevent the rise of resistance to antibiotics.)

The earliest known example of gamification? Some say David was motivated to try slaying Goliath because of rewards offered for killing the giant.

We know that millions of Americans aren’t saving for retirement. If bank-run raffles can entice low-income households to start saving, I’m all for it. Kudos to Congress and the White House for passage of the American Savings Promotion Act.