A Creative Solution in the Struggle to Save Money
EUGENE, Ore. -- Nearly seven in ten Americans have less than $1,000 in savings. But "prize-linked savings" programs are catching on across the country as a way to help build saving habits.
It was approved in Oregon just last year, and now nine credit unions in the state offer "Save to Win" programs. Members can put money into this type of account in order to be entered in drawings to win prizes.
Jennifer McFadden, marketing manager at Northwest Community Credit Union, said starting to save can be the hardest part, but if a person can look at it as an essential part of their finances, it becomes much easier.
"You realize that now it's a habit and now it's happening and you can see it building. And then, going back to the Save to Win program, you get rewarded for that,” McFadden said. "It's a great way to get beyond those roadblocks."
With a Save to Win account, the credit union member can't touch the account for 12 months. Members need a deposit of only $25 to start. The program appears to be doing its job: on average, Oregon participants have saved more than $850.
Since the prize drawings add the element of chance, the Legislature had to OK the idea. Washington state approved it in 2013.
Joyce Becker, a mill worker in Longview, Washington, won $5,000 in a Save to Win drawing. Becker said she's a dedicated saver who feels she's socked away a good amount. Her secret? Weighing what she needs against what she wants.
"Think about it before you buy something,” Becker suggested. "Is it something that you absolutely have to have, or is it just a want because somebody else has it?"
McFadden said saving money is especially tough in a culture built on consumption, even when people know they need savings for unexpected medical bills or retirement income.
"As consumers, we think of savings as a hurdle and something that maybe we can't do,” she said. "But just keep an open mind about it and remember that, even if it's just $10 a month, you're building up that extra bonus for yourself."