Groups Use Cash Prizes To Encourage Saving
When it comes to getting ahead in the world, a lack of savings can be a big hurdle, especially for low-income families. Most don't have enough money set aside for emergencies, let alone for college or a house. Some people think the answer is to make savings more fun, like the lottery, with the chance to win big prizes.
It's called prize-linked savings, something that's been available in Great Britain for decades. Now, it's starting to catch on in the United States.
One of the newest programs is called SaveYourRefund, launched recently by a nonprofit group called Doorways to Dreams. It's one of many organizations trying to find ways to encourage low- and moderate-income people to save more, especially at tax time. For some people, their federal tax refund is the biggest check they'll see all year.
So the group is offering one $25,000 grand prize and 10 weekly $100 prizes for those who agree to put some of their tax refund into savings, using Form 8888 on their tax return. The program is being promoted especially at free tax preparation sites that cater to low-income working families.
Joanna Smith-Ramani, of Doorways to Dreams, says for these families, even a little savings can make a big difference.
"At a basic level, people need savings to get them through even the smallest of financial shocks or their life just goes into total chaos and catastrophe," Smith-Ramani says.
Just one unexpected bill, she says, can set things off.
In Britain, 'Savings With A Thrill'