Are we really that different to toddlers when it comes to having the willpower to save?
It’s now April, which means our New Year’s resolutions to get that emergency fund in order, make significant inroads into our mortgages or trim our ridiculous grocery bills are probably distant memories.
Like children, we can be easily distracted by shiny new objects just begging to be added to our online carts, or feel like throwing a tantrum when an unexpectedly huge power bill thwarts our savings efforts.
And just as toddlers can be motived by promised or actual sweets, it can be easier to stay on track when a reward is dangled in front of us.
So, how can we appeal to our inner child when it comes to savings?
Turn it into a game, of course.
Gamification, whether it’s using mobile phone apps or involving family and friends in person, can effectively cement a savings habit.
It could involve setting yourself savings benchmarks tied to rewards, facing off against a friend or family member to see who is the better saver, or upgrading a virtual city if you stick to your spending habits.
You can even tie savings to forces you can’t control, like the weather.
For example, ING bank customers can connect their accounts to the ‘If This Then That’ app and choose rules that trigger transfers, such as sending money from an everyday transaction account to their savings every time it drops below a chosen temperature.
Social media addicts can capitalise on their habit by choosing to have money sent to savings every time they post to Instagram.
RMIT University Behavioural Business Lab chair Robert Hoffmann said gamification encourages us to save because it makes doing so more fun, less abstract and appeals to our competitive spirits.
Makes saving concrete
Professor Hoffmann said the way people are often presented with financial information tends to be highly abstract.
“People are just not very good at abstract decision making,” he said.
“Gamification is something that presents these kinds of things in a context that we are much more used to, like playing competitive games.
“Games are also much more concrete in terms of the outcomes that happen.”
Makes saving fun
Gamification also makes savings playful and if something is presented as a game, no matter how hard it is, people will be more engaged, Professor Hoffmann said.
“Humans are playful by nature,” he explained.
Makes saving competitive
People also have a competitive streak and love to benchmark their performance against others.
“Certain kinds of gamification could lend themselves to this sort of competition,” Professor Hoffmann said.
If you’re the competitive type, participating in a simple competition against your spouse or friend could be an effective way to boost your savings.
You could do a no-spend challenge, where you are only allowed to buy agreed essentials and the winner is the person who lasts the longest.
You could also use technology like mobile phone app Fortune City to help you stay motivated to track your spending.
Fortune City lets you track your income and expenses, and each time you log an expense you can swap it for a particular type of building, depending on the category, and eventually people start moving in.
As ‘mayor’ of your city you accumulate gold coins, assign city residents jobs, and compete against friends who also use the app to see who can build the best city.