Would you rather save or spend? When you dream about winning the lottery, is your first thought about how you’re going to save or invest the money? I’m sure I’m the norm; I know how I’d spend the money. I don’t want a lot, though. I want to pay our debt, buy a bigger car, and hire a maid. Yes, I’d save, but I’d spend first.
We need to spend less than we have coming in. Having a healthy savings account in addition to an emergency fund is good financial planning. Is having money in the bank its own reward? Interest rates aren’t favorable enough to make earning interest a viable goal. Does saving just take discipline and self control?
Saving in itself doesn’t offer a lot of incentive beyond having money in the bank. How much and how diligently would you save if you could win money for your fiscal responsibility? The idea sounds a lot like something for nothing, which sounds good to me.
Michigan was the first state to start a savings lottery on a large scale. Savers had to deposit regularly and were allowed access to their money. By saving for the specified time period, all participants were eligible for a $100,000 grand prize. Weekly prizes were offered to keep savers on track. The lottery drew in millions in savings and got many consumers saving for the first time.
The Michigan model was so successful that many other states are planning to roll out savings lotteries of their own. Maryland, Maine, and Rhode Island and have passed laws already to hold savings contests. Iowa, Washington, New Mexico, and Nebraska are planning to pass their own laws this year.
I love this idea. It sounds so easy. I wonder when Texas will do something similar. I’d participate.