Toshl Finance Blog

Gamification of personal finance, there’s a better way to do it

There’s a lot of talk of gamification in personal finance, but it shouldn’t be about piling on extra layers of unwanted information. It should help us understand existing information better and understand the way our habits need to change. It should keep the user’s best interest in mind. Not the marketer’s.

I was just reading an article by Reuters on the gamification of finance in the United States. It describes some approaches various financial startups are taking to gamify personal finance. It says that “gamification” is an inelegant term for what they’re doing, but I would go further than that. The term isn’t inelegant, but the type of gamification they have in mind is. They describe systems of badges, contests, prizes, competitions etc. a lot of excessive cognitive add-ons to the finances you should be taking care of.

Finance should be more fun, even gamified, and that’s what we’re striving to build with Toshl. But forcing in all the laziest approaches to gamification such as those described above is not the solution. Personal finance needs to be simple to be fun and that also means unburdened by excessive information. When gamification is used in personal finance it should be used to convey more information about the user’s finances and encourage positive financial habits. There are so many ways to convey information in games that makes it simpler to understand, internalize and at the same time, not make it feel like a chore, but something playful and fun. Going for prizes, sweepstakes, coupons most of the time only introduces more cognitive overload, confuses and makes us change our spending patterns in ways that stray from the optimal. An effective personal finance manager should help you realize your true financial needs, not create new ones with false senses of economies.

With Toshl we want to build a fun and simple way to manage your finances. That means that when we decide to gamify the experience it will be truly informative and help you understand the way your personal finances work and change. Most importantly it needs to be possible to opt-out of the gamified portions of the app. A lot of people simply need a simple, yet powerful tool to keep track of and plan their finances. Simply being made aware of where our money is going changes our habits and patterns of spending. Some people want a more playful experience and an easy way to change their spending patterns even more on top of that. That can be truly great and incredibly helpful, but it shouldn’t be forced on anyone and the habit-changing goals of the gamification layer should be clear. Nobody wants FarmVille-type emotional extortion when it comes to a thing as important as managing personal finances.
Gamified finance can be a great learning tool, but it needs to be fun and it needs to be oriented to the long term with the user’s best interest in mind.

We have a lot of ideas on how to make this experience great and help people change their financial behavioral patterns for the better, but in a way that they understand exactly what’s going on. The gamification layer needs to be as informative as playful, otherwise we would be missing the mark. We’re looking forward to all the things we can bring to the table, but first we need to take care of a lot of more basic building blocks to make Toshl a truly effective system to track personal finances. We love the feedback that we’re getting from you, the Toshl community. It helps us to focus and be in touch with people’s needs when it comes to personal finance. Keep it coming! We’d love to hear what you have to say on the topic of gamification in personal finance.

Written by Matic Bitenc

Posted in Opinions