Behavior Changes and Prize-Linked Savings: Managing Financial Volatility

Categories: GamificationIncome VolatilityPrize-Linked Savings

Consumers from across the income spectrum are faced with the challenge of uncertain income and expenses, but for low- and moderate-income consumers with limited access to financial products and services these challenges are magnified. Commonwealth undertook a year-long study with eight Greensboro Municipal Credit Union consumers in North Carolina, meeting with these individuals to gain a deeper understanding of their financial lives. Through in-depth interviews and surveys, Commonwealth compiled a rich trove of information and insights related to a number of different aspects of consumer's financial lives that are described in this paper. This report focuses on three of the study's participants and their unique experiences with financial volatility.

“When she first opened her Save to Win account, Julia hoped to save enough money to fulfill her dream of becoming a homeowner. Despite the volatile nature of her financial life, Julia was able to make a $25 monthly deposit into her STW account a part of her financial routine. Seeing herself save successfully through financial dips and spikes spurred Julia to increase her monthly deposit goal to $50-$100 just a few months after opening her account.”

“Watching herself save successfully for the first time increased Silvia’s financial self-efficacy and confidence. Her change in attitude towards savings and personal finance resulted in her household taking important steps to be better prepared for financial emergencies and retirement.”

  • Consumers may have the desire to begin a savings habit, but are held back by a feeling that it is either too difficult or out of reach.
  • Individuals who actively used Save to Win accounts experienced positive changes in their ability to manage financial volatility.
  • Besides being a vehicle for storing money, a savings account should also be fun and engaging to encourage use and bring excitement to an otherwise difficult activity.
  • Products with a low barrier to entry provide a better experience for a wider range of consumers.