If budgeting is fun, people will be more likely to do it.

That's the theory behind financial institutions' experimentation with game theory to encourage healthier personal spending.

So-called gamification requires some cultural adjustments — most of us were raised to see games as leisure, if not outright frivolous activity. But there is evidence that gaming can capture and hold user attention, which enhances education and can change behavior.

More grist for the argument was provided this week by SaveUp, a one-year-old start-up that uses some gaming elements to encourage savings, debt reduction and other personal financial changes.

The Filene Research Institute, a nonprofit think tank for consumer finance matters in Madison, Wisc., reviewed a six-month pilot program that measured the impact of SaveUp on 14 financial institutions, including Northeast Credit Union in New Hampshire, Educators Credit Union and Summit Credit Union in Wisconsin and Xceed Financial Credit Union in California.

It found that, of the credit union members who participated:

  • More than half said SaveUp motivated them to save money and pay down debt
  • More than 40% had a more positive opinion of their institution
  • 64% visited the online saving program at least once per week
  • 49% visited three or more times weekly; and
  • 50% recommended SaveUp via their credit union to their friends.

Also, 95% of the participants said they believed their credit union cared about their financial health.
"If you can create engagement and stickiness…and can get people to see the total money saved along with educational content that's fun, the combined effect is to move people to think about their finances differently," says Priya Haji, CEO and cofounder of SaveUp, which offers prize to motivate people.

Users of SaveUp earn points for paying down the principal on debts or increasing savings. The more points a consumer has, the higher the odds of winning a prize through monthly drawings or other online games. The prizes are funded through sponsorships, advertising and financial referrals.

During the six-month trial, 8,369 consumers used SaveUp. More than 250 prizes were awarded, 7,859 educational videos on personal financial health were viewed, 33,463 financial accounts were linked to from SaveUp, $43.3 million deposits were made and $32.4 million in debt was paid down.

Filene did not track how many accounts SaveUp users opened, but it said that gaming clearly gets people to spend more time on tasks such as financial planning. The average American devotes about 2.6 hours per month on financial planning and budgeting, or one fifth the time spent on games or using a computer for leisure, it said.

Eleven of the 14 credit unions continued to offer SaveUp to their members after the pilot.

"It's improving behaviors -- which is better than nothing," says Ben Rogers, research director of Filene. "What's interesting is more than half of the people said [SaveUp] helps them reduce debt, save money or both. If more than half of people are telling you they are being motivated, that's pretty good."

Gamification is popping up in various financial services circles, such as training debt collectors and in-store marketing.

Haji does not see her company as a strict gamification play, since SaveUp is a financial product rather than a virtual teaching tool. "We see it as a rewards game for lack of a better word," Haji says. "It's not a virtual reality where you pretend to put money into bank and see what the result would be."