By Katy Davis

As an unabashed finance nerd, I love a good tip about how to improve my financial health. I always look forward to April, Financial Literacy Month, for a flood of recommendations. Managing personal finances is hard, and recent research suggests that a huge proportion of Americans, not just those at the lower end of the income spectrum, could stand to improve their financial lives.

But even the best financial tip can be hard to put into practice. At ideas42, we know from the research world that information alone is often not enough to help people move from intention to action. It’s critical that financial providers also design products and services with financial health—and real human behavior—in mind. That’s why this Financial Literacy Month, we’re putting forward some behavioral literacy tips for financial institutions and professionals.

1. People are more focused on today’s finances than tomorrow’s.

Those of us who work in finance spend much of our time thinking about financial issues. Financial planning is important, but for most people, it’s just a small sliver of day-to-day life. Humans have limited attention that tends to be consumed by getting the kids to school or meeting deadlines at work, among other responsibilities. Understandably, people prioritize their urgent needs over longer-term ones. Because of present bias, activities that pay off in the distant future but have small costs today (like planning for retirement) can be easily deprioritized. Tasks that are complex and don’t have a concrete deadline are especially easy to procrastinate on until tomorrow. Promising behavioral tactics to solve this problem aim to meet people where they are and help them put out fires in the present, form connections from their present self to their future self, and free up mental bandwidth while creating a moment for concrete financial planning.

2. Bankers think in terms of financial accounts; people think in terms of mental accounts.

Because finances can be so complex, people create mental shortcuts to simplify their decision-making. We tend to assign labels, or mental accounts, to our spending based on the origin of the money and/or categories of spending (food, clothes, rent, etc.). Most financial products don’t align with this tendency. Account statements and online banking portals typically display account balances, transaction activity, and little more. Unfortunately, today’s balance doesn’t account for upcoming needs or help plan for unexpected expenses that (predictably) arise. Budgeting tools fall on the opposite end of the spectrum by providing way too many nuanced budget categories to track and monitor, rather than a clear sense of how much is left over for spending today. This information overload leaves people disengaged and without a clear step forward.

3. People may come up with ways to design for their own tendencies if financial products come up short.

Despite the complexity, most people have good intentions when it comes to managing their money. In fact, some people are aware of their own behavioral tendencies and concoct smart ways to design for themselves, like managing their self-control in the face of temptation. Consider some of the workarounds used to inhibit spending: people give their credit card to a friend or family member, others put it in a glass of water in the freezer, others may never activate a credit card to prevent its use. At ideas42, we see this desire for self-imposed commitment devices across many projects in consumer finance. For example, my colleague Abi Warren described giving savings pouches to people participating in a Madagascar cash transfer program as a way to separate savings from the rest of their money. She said the team heard a strange request: Do you have anything that’s harder for me to open? While it may seem like customers prioritize flexibility and freedom, there is clear demand for smart behavioral design that helps people meet their financial goals.

The way financial products and programs are designed goes a long way toward promoting financial health, which is why providers should play a central role in furthering the ideals of Financial Literacy Month. The real impact comes from how financial institutions and professionals actually embrace and embed these behavioral principles within their services. The good news is that better financial health not only benefits consumers, but the potential for reducing credit risk and building deposit balances also creates positive outcomes for financial providers.