Tag: savings

A number of government-backed programs encourage good financial habits, from retirement-savings vehicles such as IRAs to college-tuition plans, but few do so with the idea of having some fun.

But a state representative from East Stroudsburg, Rosemary M. Brown, has introduced House Bill 858, which would encourage savings accounts with some of the excitement of a lottery or raffle.

Brown, a Republican who represents parts of Monroe and Pike counties, said she has a passion for financial-literacy initiatives and has encouraged various proposals that would make financial life skills a mandatory part of public education. While such efforts have not succeeded so far, Brown said, the hope is that the attention around such efforts will increase participation in financial education as an elective.

In a memorandum asking colleagues to support her legislation, Brown noted that about 66 percent of U.S. citizens cannot pass a basic financial literacy test.

House Bill 858 is an extension of the concept of encouraging good financial habits, Brown said.

In 2014, she said, Congress passed the American Savings Promotion Act, spurring 27 states to create savings-promotion plans.

The idea behind her bill is to allow banks and credit unions to create incentive-based savings programs in which people could be entered into a lottery or raffle to win prizes based on saving money or taking other financial-literacy steps. The prizes might include additional money.

“By creating an incentive-based savings program, this legislation will help foster monetary savings among our constituents by giving them a chance to benefit additionally while they help build their savings,” she wrote.

The bill passed the House June 5 and went to the Senate, where it is in the banking and insurance committee, according to an online bill tracker. Brown said she expects to win support in the Senate.

Under H.B. 858, people might be able to participate in a lottery or raffle by entering into transactions such as:

• Depositing or transferring money into a qualified account on a recurring basis.
• Refinancing debt to obtain a lower rate.
• Paying off outstanding debt to lower their debt ratio.
• Preparing a budget or debt-reduction plan.
• Attending free financial-literacy programs sponsored by an eligible financial institution.
• Using online financial education, budgeting or debt-reduction tools.

If people want to save more but are having difficulty making the decision, Brown said, “we are going to try to give you a push to do it.”

The proposal helps financial institutions get new customers, while helping people reach their financial goals, she added. One issue that needs to be worked out is which state agency would be responsible for monitoring the program. Whether it is the banking department or attorney general’s office or another agency will need to be worked out on the Senate side, she said.

Dulcey Antonucci, director of communications for the Pennsylvania Department of Banking and Securities, said the agency is aware of the legislation.

“The Wolf administration believes wise financial planning and savings decisions are important for everyone,” she said in an email.

The state already does a lot to help consumers, Antonucci added.

“The department’s Financial Services for Consumers and Business (FSCB) unit helps consumers and investors protect and grow their money through the Investor Education and Consumer Outreach program,” Antonucci wrote. “All of our programs and presentations are free and help to educate and protect consumers.”

Those efforts include programs that teach students the basics of investing, as well as retirement planning, she added.