With a new year comes new resolutions. Are financial resolutions in your books for this year?
If so, how does a website that punishes you if you don’t hit your benchmark with a chosen fee sound? StickK is a free website that allows you to set financial goals or “commitments”. Using your credit card, the website allows you to place a bet on yourself to see if you can achieve your set goals. Through weekly check-ins, the site documents your success and your failures. When you miss a benchmark, the website will charge you a penalty fee. Ouch.
The site’s concept was created by behavioural economists from Yale University. A pro behind the site is that you do have the power to choose the cost of your fee. That said, your money is taken away from you if you do not reach your goals. Sounds enticing, right? The business strategy behind the website is quite simple—obey your goals or lose your money.
But does this penalty method actually work? Apparently so. According to StickK, users who opt to potentially lose money are three times more successful in hitting their goals.
Is setting your own mental financial strategies enough? Or is money, or the potential loss of money, the best form of motivation?