Gamification is the process of incorporating elements of video games into a business, organization, or system, with the goal of boosting engagement or performance. Gamified personal finance apps aim to help people make better financial decisions, often by redirecting destructive financial behaviors (like playing the lottery) toward positive outcomes
Good at gaming, bad at saving
25% of Americans have no retirement savings, and half are living paycheck to paycheck
- Experts predict that Social Security funds could dry up by 2035
- Many Americans have low levels of financial literacy
- Investing a few hundred bucks every month would make most people millionaires by retirement
The risks of gamification
Receiving extrinsic rewards when we perform a behavior can affect our intrinsic motivation to repeat that behavior both positively and negatively
- Gamified finance apps can also be addictive and encourage risky financial behavior
- What’s more, gamification doesn’t seem to work for everyone
- Given that 14.1 million Americans are unbanked, and millions more struggle with financial literacy, it’s reasonable to think that gamified financial apps could help many people work toward financial independence
Saving money is psychologically difficult
What if we could infuse the instant gratification of video games into our long-term financial habits?
Gamification and the brain
Games can motivate us by satisfying our psychological needs and giving us a sense of reward.
- When released simultaneously, these neurotransmitters can put us into a state that Zak calls “neurologic immersion.” In this state, our everyday habits have less control over our behavior, and we are better able to take deliberate action.
What is gamification?
Gamification takes the motivating power of video games and applies it to other areas of life
- Brands have used gamification to boost customer engagement for decades
- In addition to marketing, gamification is used in social media, fitness, education, crowdfunding, military recruitment, and employee training, to name a few applications
Gamifying personal finance
Some of the most successful apps are redirecting destructive financial behaviors, like buying lottery tickets, toward positive outcomes
- Long Game encourages users to make automatic or one-time investments into a prize-linked savings account
- As users make investments, they earn coins that can be used to play games, some of which offer cash prizes
- Blast is a savings app aimed at traditional gamers
- The platform lets users connect a savings account to their video game accounts
- Users then set performance goals in the video games, such as killing a certain number of enemies, which triggers a pre-selected investment into the savings accounts
The Nature of Habits
Research suggests that about 40 percent of our daily activities are performed out of habit
- We spend much of our lives on autopilot
- From an evolutionary perspective, it makes sense that we rely on habits
- Our brains require a lot of energy, especially when faced with tough decisions and complex problems
- However, those patterns don’t always serve our long-term interests
Why gamification works
Games offer psychological rewards that can motivate us to perform certain actions that might otherwise have seemed too boring, taxing, or emotionally draining
- Gamification offers a way to outsource your willpower
- What’s more, gamifying parts of your life is less of a change of mind and more of an impact on your environment
