There are many behavioral barriers to saving, especially for financially vulnerable households. Setting up automatic savings transfers is one solution to minimize how often someone has to overcome the psychological challenge of giving up money in the present for a payoff in the future. However, in our research we found that lower-income people in the U.S. may be less likely to engage in automatic savings, based on analysis from the U.S. Financial Health Pulse. Automatic enrollment in auto-savings (which has had big results for retirement savings) could help to shrink that gap, yet it isn’t always feasible.
Enter “active choice,” another approach to boosting enrollment in automatic savings programs for short-term savings that is borrowed from retirement savings programs. This approach presents information about someone’s options, such as enrollment in automatic savings, and asks the person to make an affirmative choice. This simple action increases the person’s attention to the choice and prompts them to think about their goals to overcome procrastination.
Financial Health Network tested out active choice for short-term savings through the Financial Health Leaders Lab, a program funded by the MetLife Foundation to provide behavioral economics and product testing support to companies that are developing innovations to improve financial health. We worked with Even, a financial management platform offered by employers as a benefit for their workers, to increase the impact of Even’s automatic savings feature for workers who live paycheck to paycheck.
Even added an active choice to enroll in automatic savings to its app onboarding process for a randomized subset of new users in February 2020. For these users, it displayed a prompt to enroll in automatic savings at the end of onboarding, which asked users to either select from among several savings goals or to indicate “I don’t want to save right now.” The other new users experienced the standard onboarding process and had the option to enroll in automatic savings by navigating to a tab on the main screen marked “Save.”
Adding active choice to onboarding had a meaningful impact. The users who saw the active choice message at onboarding had 31% higher enrollment rates in the automatic savings feature than those who experienced the standard onboarding process. Over the course of 8 months, the group that saw the active choice messaging accumulated $52 in net savings balances, on average, which was 42% higher than the control group.
These findings add to the collective body of short-term savings knowledge, including research and savings interventions led by BlackRock’s Emergency Savings Initiative.
Companies are rightfully cautious to add steps to onboarding, when user dropoff can occur. Importantly, the additional active choice screen that Even added did not impact onboarding completion rates, and the company has now rolled out active choice messaging to all new users.
In sum, this research found that onboarding to a personal financial management app can be a good time to engage consumers in decisions about their financial health, including enrollment in automatic savings.
Read the complete report for more details about how active choice messaging can help people to take action toward their short-term savings goals.
BlackRock’s Emergency Savings Initiative
BlackRock announced a $50 million commitment to help millions of people living on low to moderate incomes gain access to and increase usage of proven savings strategies and tools – ultimately helping them establish an important safety net. The size and scale of the savings problem requires the knowledge and expertise of established industry experts that are recognized leaders in savings research and interventions on an individual and corporate level. Led by its Social Impact team, BlackRock is partnering with innovative industry experts Common Cents Lab, Commonwealth, and the Financial Health Network to give the initiative a comprehensive and multilayered approach to address the savings crisis. Partners including UPS, Mastercard, MX, and Self Financial have joined BlackRock’s Emergency Savings Initiative to help their employees and customers take the essential first step toward long-term financial well-being.