Better Financial Motivator: Stick or Carrot?

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We all have financial goals that we want to reach. Some of us do better with a reward attached to reaching our goal (carrot), while others may actually try harder if trying to avoid a punishment (stick). We are motivated by personal desire, by our family, by our friends… but how about a website?

For the those that need that extra bit of discipline, check out, which lets you create a “commitment contract” which have real penalties attached to them. For example, you could commit to saving an extra $150 each month in a separate savings account for 6 months. You could set a penalty of $250 if you don’t follow through – send to a friend, enemy, or donated to an organization that you dislike (NRA, PETA, whatever… dubbed anti-charities).

The site is serious, and started by economics professors who all agree that incentives make the world go ’round. You choose a third-party referee (input their e-mail), as well as give them your credit card information. If you don’t follow through, your card is charged!

If you do better with carrots, you can always set that up yourself. If you reach your savings goal, go out and get a manicure or a nice steak dinner.

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  1. WillSamolis says:

    Nice idea though I’d rather donate to a random charity then one I am wholeheartedly against.

  2. Wow, that is a great idea! I think that would push a lot of us to be more committed to our goals. Sometimes forced discipline is necessary!

  3. Patrick says:

    This seems like a good idea and lots of people will surely jump on…but really, it is not a good idea to tie personal goals to financial rewards/punishments in this manner. Daniel Pink, author of “Drive, The Surprising Truth about what Motivates Us” discusses this and other common motivators that don’t turn out how we think they should. I recall reading about a therapist who tried the money punishment method with a client to help him break an addiction. In the end, the therapist realized that this was the wrong way to go about solving the root of the problem. It was not a proper motivator. It may have seemed to help for a while, but was not a solid plan.

    The website incorporates the real, tried and true method of reaching your goals. 1) writing them down, 2) accountability with someone you trust and then adds the money contract to the mix to make it more interesting and appealing to some people.

    Maybe I’m wrong and the website will be a resounding success. That would be great. We need more websites that help us reach our dreams.

  4. Regarding the type of reward you may set, I learned that, at least in fitness goals, you should dissociate the reward from the goal, otherwise you’ll just be setting yourself back a couple steps and won’t enjoy the reward. For example, when I was trying to lose weight, I rewarded myself with a new workout outfit instead of indulging in that extra scoop of ice cream.

    For finance, if you reach your savings goal, the reward could be your significant other giving you a massage, or spending a weekend being lazy at home, nothing that costs money.

  5. Attorney says:

    The punishment might work for some, but I prefer the rewards route. I can see giving myself $250 for reaching a certain investment level, but to give someone else $250 when I don’t reach that level? No way.

  6. Jays Cash Blog says:

    Now that sounds like motivation to save that money. Some people spend money like it is going out of style, this would be the perfect stepping stone for one of those people who want to change their ways. Sounds like a good program I will tell a few people about this who are spend happy… Thanks!

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