Posted by Cathy McCabe.
With 15 nieces and nephews in the millennial age range, I have a ready-made focus group when I want to check the pulse on something. At a recent family gathering I asked them, what would make you save and invest for the future?
I learned that my nieces and nephews were all in a workplace savings plan. Amazingly, some of them were even maxing out. I like to think thatʼs due to their saving-obsessed aunt, but realistically I think itʼs also driven by something else: gamification.
Saving has to be made as engaging and rewarding as the various apps that currently captivate smartphone users. To encourage young people to defer part of their salary (and the gratifying experience of spending money), it paradoxically requires something that offers instant gratification. Savers need the same kind of excitement they get playing Mario Kart with friends, or reaching the next level in Candy Crush. Gamification uses elements from the world of gaming—like challenges and competitions—to reward positive actions in the real world, be it 10,000 steps walked or $1,000 saved.
Gaming the everyday
Saving for retirement is just one of many activities being gamified. There are so many wonderful apps out there. Here are a few of my favorites:
- Qapital lets you set up “triggers” that automatically save money when you’ve achieved a certain goal–for example, a fitness goal, like running five miles (you can sync it with your running app). You can also set up “guilty pleasure” triggers to penalize yourself for bad behavior (like overspending on your credit card).
- Fortune City lets you build your own city while tracking your real-life income and expenses. It’s a fun way to develop good budgeting habits.
- Thriv motivates you to reach certain savings goals by visualizing them. Create titles, price tags, images and links to make those future purchases more real.
- Apps can even make debt seem fun. By organizing all your loans, incoming debits and outgoing debits in one place, apps such as Debt Tracker and My Debts help track your overall progress. Every time you make a significant dent in your total debt, you’ll feel as accomplished as a gamer hitting the next level!
So many popular apps are about rating and comparing. Drivers get rated by passengers (and vice versa), students grade their professors, and even financial consultants are given scores. That’s because we expect to comparison shop for every purchase. What we love even more is comparing ourselves with each other—to know what our peers are doing. Then we can get a more objective gauge on how well we’re doing.
A mile run, a dollar saved?
This definitely rings true for me when it comes to exercise. After I ran five miles last Sunday, I felt terrific. But it was only after I turned on my running app and shared it with my fellow runners that I felt a sense of triumph. We measure our health and wealth not in a vacuum but according to the achievements—and expectations—of friends and family. In the past few years, it has become easier and more fun to compete. FitBit turned the chore of counting steps into a motivating competition with our friends and family. Now, I set my goal of 10,000 steps per day with a feeling of eager anticipation—and if a friend is up for the challenge, I get really competitive, too.
Even if you don’t choose to share your information, these apps make it easier than ever to set personal savings goals, mark your progress and get rewarded for your efforts.
My nieces and nephews are a self-motivated bunch. But they told me the easy pleasure of accessing their accounts online and seeing their progress on a colorful chart definitely helps keep them motivated. User experience and interface design have come a long way in the last few years, and retirement plan providers have competed with each other to make their websites as engaging and motivating as possible. Tracking contributions and investment performance can be pleasurable—even addictive. Users can see clearly what they have, how they are doing and what changes they need to make in order to stay on track.
A numbers game
Take the design elements from your retirement plan website or favorite app and apply them to other savings goals. You’ve always had a nagging feeling that your emergency fund is too small, that it should be able to cover six months of living expenses. So, if you spend $3,000 per month, you’ll need to save $18,000, not the $9,000 that makes up your current fund. To get where you want to be, create a spreadsheet in Excel with a weekly savings goal column (say $175), a column for how much you actually saved, then a third one showing how much you were below or above target (you can make the background of each red or green). Every time you get a green, treat yourself to an inexpensive reward like a long soak with a bath bomb. And if you stick to your weekly target, it will take you less than a year to have your desired emergency fund.
One thing apps can’t do
Surprisingly, as much as millennials live their lives online, they are still interested in talking to a flesh-and-blood financial advisor. We will always need that human touch. That’s why one-on-one meetings remain a crucial part of retirement planning—for which technology is no substitute. However, your advisor can’t be there 24/7 like a pocket coach providing inspiration and incentives. Happily, your smartphone can.
Everyone likes positive reinforcement. Gamification is providing that daily boost for people who need a little extra motivation.