Most consumers know they ought to pay down debt or save for a rainy day. In reality, though, many people don't. "Gamifying" personal finance—that is, using game mechanics to reward positive behavior and educate players about money in a fun format—is one strategy for bridging that gap between what people know they should do and motivating them to actually do it.

"One of the core problems with personal finance is it's about deferred rewards," says Gabe Zichermann, CEO of Gamification Co, which runs a major website and annual event for the burgeoning gamification industry. "You're making a series of choices today designed to help you retire in 20, 30, or 40 years, which is not rewarding in the near term, so you put it off."

Smartphone and Web apps like Payoff.com, CreditCardio.com, and others use rewards such as badges or prizes to reward positive financial actions in the short term. However, the gamification of money actually predates the internet, as Zichermann points out. The popular real-estate board game Monopoly dates back to the early 20th century, when its precursor, The Landlord's Game, was invented as an anti-capitalist game.

"When you play capitalism, somebody ends up with all the money and everybody else is bankrupt," explains Zichermann. "It became really popular in the Depression Era, and the interest is growing in [the concept of gamifying money] because with the financial crisis of the last two years and the increase in popularity of all kinds of game platforms, people are logically putting two and two together."

The popularity of tablets and smartphones also means users can access these tools from practically anywhere and squeeze them in during downtime. Even people who aren't savvy about managing their own money can amass huge caches of virtual currency in games like FarmVille.

To apply those concepts to their own budget, they could turn to a site like Payoff.com, which launched last year. The Los Angeles-based site uses badges to lead users out of debt, creating what Payoff founder and CEO Scott Saunders calls "a road map for rational behavior." Payoff is connected to banks, credit card issuers, and other financial institutions, so some of those badges connect to existing rewards networks and offer more tangible rewards like cash prizes. "Every badge that you earn gives you an entry to cash prizes," adds Saunders. "The more you do, the higher your likelihood of winning a cash prize."

Seattle-based Bobber Interactive also explores the gamification of money, specifically for Generation Y users. The company experimented with a consumer-oriented Facebook app, but according to Chief Product Officer Scott Dodson, it has shifted its focus to building tools for financial institutions like banks, card issuers, and two Fortune 150 companies that have yet to be announced. Dodson says gamification has exploded in popularity since 2009, when he first searched for the term online and found four references. Now there are more than 12 million Google search results. Dodson says the most effective gamification tools offer intrinsic rewards (such as the satisfaction of saving money) as well as extrinsic ones (such as earning a prize or reaching the next level). "They should deliver experiences that make people feel good about their abilities and feel empowered moving forward," he says.

Adds Saunders, "game mechanics are getting an incredible amount of interest, but you can't just apply game mechanics to anything. It has to be done thoughtfully. A lot of these game mechanics are being set up to see the advertisers and merchants win and aren't necessarily being set up to see the consumer win. Consumers need to be leery of what the games are taking them towards." (Also check for security features before entering your bank or credit card information. Payoff, for instance, uses 256-bit encryption to keep users' financial information secure.)

Another potential pitfall in using games to teach personal finance is that some lessons don't translate seamlessly from the virtual to the real world. "In a game, if you don't want to work to earn the points, all you have to do is throw dollars down and the problem magically goes away," says Zichermann. "That is a true statement about most of the economy, but not a good financial philosophy."

Gamification is also a hot topic in health and wellness, as tools like Pact and Humana Games for Health use game mechanics to incentivize positive lifestyle changes. Some health insurers have begun using these tools themselves, and health and personal-finance converge in CakeHealth.com, a gamified platform that helps users track healthcare spending.