Lottery tickets sell hope to millions of people who will never become millionaires. For a dollar or two you get the chance to dream about what it would be like to kick back in a nice house, drive around town in a fancy car, or retire on a tropical island. Many people who play the lottery know deep down that none of these things will ever happen to them. But it’s a cheap way to envision a quick exit from the working world.
What if saving money had the possibility of winning a prize attached to it the way buying a lottery ticket does? Low income Americans are the least likely to save for retirement. At the same time, Americans lose $90 billion gambling each year. And the majority of people who gamble are those who can least afford to lose that disposable income.
The Doorways to Dreams Fund, a nonprofit organization based in Roxbury, Mass., recently began an innovative experiment that combines saving money for the future with the excitement and possibility of gambling. For each $25 deposit in 8 participating credit unions in Michigan, savers get one chance to win a $100,000 grand prize and smaller monthly prizes such as laptop computers, mp3 players, gift cards, and cash. Launched in January, the Save to Win program already has over 5,500 savings accounts containing $1.8 million and $12,000 worth of prizes have already been awarded. Most of the participants spent money on the lottery or gambling in the past 6 months (62 percent) and have a household income of less than $40,000 annually (43 percent). About 29 percent of the participants reported that their total financial assets and savings are worth $2,000 or less.
Only one account and a maximum of 10 entries in the prize drawing are allowed per household and just one withdrawal is allowed from the savings account each year. A part of the return on each account is relinquished to fund the prizes. “You basically forgo a portion of your interest for the chance to win a prize,” says Preeti Mehta, director of special projects for the Doorways to Dreams Fund.
Tell us, would you put money in a savings account with lower interest for the chance to win a prize?