By Tanya Ladha, Senior Director at Financial Health Network
Saving money is hard. So hard, in fact, that experts and academics have spent decades studying human behavior in an effort to make it easier for us, designing tricks and hacks that help us save — automating savings (think 401k retirement plans, created for us to set-it-and-forget-it), turning savings into a game (prize-linked savings has helped millions), or helping us leverage moments like tax-time to save more than we could on a regular day. And indeed, these tips have helped millions of people save. Yet still so many of us struggle to save, especially for emergencies. This week, as we support and participate in America Saves Week, we are taking a minute to ask : what if we took the fundamental principles of improved savings habits, and tested them in new, somewhat unexpected places? Which industries and leaders could step up to take a larger role in helping millions of people save?
Many have heard the statistic before — 39% of Americans could not come up with $400 in an emergency. We also know that individuals and households face unexpected financial expenses often. Our team is part of BlackRock’s Emergency Savings Initiative which was formed in 2019 to address how the lack of emergency savings can have dire and long-term consequences for families, overwhelmingly so for those that are low-to-moderate income. BlackRock Social Impact understood this to be a national crisis, crippling millions of Americans, and called on the expertise of three nonprofit partners to help do something about it — something different than what has been done before. As leading authorities on financial health and behavioral economics, the nonprofit partners (Common Cents Lab, Commonwealth, and our team at the Financial Health Network) are working with BlackRock to expand the supply of high-quality savings options available to financially vulnerable Americans.
Savings Innovations in Process
So, what does it look like to use concepts that are tried and true, in new and innovative ways?
One of our first project partners was Acorns, one of the fastest growing financial wellness platforms in the country, with 6.2 million users. When it launched, Acorns helped Americans invest their spare change by rounding up purchases, helping more people enjoy the gains of the market. Rounding-Up is a well-known way of helping build savings through frequent accumulation of small amounts of money. The Emergency Savings Initiative is helping Acorns design and develop new ways to leverage the automated power of rounding up to save for both the long-term, and the short term, so that users will be prepared for an emergency, while also working towards larger goals.
The Emergency Savings Initiative has also partnered with Uber, the technology company that revolutionized on-demand transportation. With the launch of the Uber Wallet in the fall of 2019, Uber, for the first time, is in a position to help their drivers take the essential first step towards building an emergency savings cushion. By embedding tested behavioral principles and structures within a platform that serves almost 1 million contract workers in the US, The Emergency Savings Initiative can help a global gig-economy platform build financial resilience among their drivers.
Uber and Acorns are not alone. The caliber of partners that the Emergency Savings Initiative has already gathered speaks to the urgency and scale of this crisis. Etsy, MasterCard, Brightside, UPS, and even Arizona State University have already joined the ranks and are rolling up their sleeves to find new ways to deploy existing research that will create products that make saving easier for their employees, users, students, and customers. With technical support and expertise provided by the Emergency Savings Initiative, we are ready to transform the concepts of yesterday and today, into the solutions of tomorrow. Learn more about the Emergency Savings Initiative, and how to partner with our teams to help more Americans save at www.savingsproject.org.
BlackRock’s Emergency Savings Initiative is a three-year commitment to help people living on low- to moderate income gain access to and increase usage of proven savings strategies and tools to help them establish an important safety net. Led by their Social Impact team, BlackRock, along with nonprofit experts known for their innovative approach to consumer finance, Financial Health Network (formerly CFSI), Commonwealth, and Common Cents Lab, are working to address the crisis and fuel the future of savings innovation. This post is content developed in conjunction with the Emergency Savings Initiative project.
By Financial Health Network on February 26, 2020.