Saving Made Easier with the Financial Health Check

Feb 28, 2018 | By ideas42 in Blog

Building a savings cushion is easier said than done. Irregular cash flows and unpredictable expenses make it difficult to determine how much to save. After surveying balances across accounts and projecting future bills, you still have to either make a trip to the bank or navigate an online portal to actually move money into a savings account. But having even a small emergency savings fund can make a big difference in people’s lives when unexpected expenses occur—and they always do.

While financial education programs can play a role in increasing knowledge, they are often ineffective when it comes to helping people set and reach goals. As we know from behavioral science, having more information doesn’t necessarily spark action.

That’s where the Financial Health Check comes in. We first piloted this behaviorally informed financial program in 2014. Rather than overloading people with information, the Financial Health Check focused on helping them start saving right away. During an in-person coaching session, we encouraged recipients to take positive actions – such as signing up for automatic transfers and text message reminders about saving – rather than giving them a to do list for later. The results were promising—credit union members with no savings at the start had 21% more savings at the end of the study period than the control group—so we took what we learned, modified the program, and offered it to an even larger group.

With funding from MetLife Foundation, the second pilot of the Financial Health Check offers a one-time, 30-60 minute phone call with a specially trained consultant to members at BECU, one of the nation’s largest credit unions. Twelve months later, net savings deposits were 34% higher for those who had access to a consultation, compared to peers who were interested in working on financial goals but weren’t offered a session.

So how does it work? Adding to the behavioral levers in the initial pilot, we refined the Financial Health Check with three key objectives to reduce hassles and make saving even simpler:

Create a moment that fits into people’s lives

Most people want to start saving more money—but when? As a long-term endeavor that is usually top-of-mind when money is tight, saving is easy to put off until later.

The Financial Health Check is a scheduled appointment, which naturally carves out time for working on financial goals. It entails just one session, and offering coaching over the phone minimizes the time and coordination it takes to participate.

Facilitate follow-through in real time

The goal of the Financial Health Check is to prompt people to take action right away for their financial futures (rather than sharing information for them to use later).

That’s why clients take action during the call. The consultant works with them to review monthly budgets and identify how much cash to put toward saving or debt reduction. They then prioritize across goals by considering concrete dollar amounts and timeframes.

Make it automatic

Because barriers to sustained saving include forgetting and small hassles like logging into online accounts or stopping by the bank, consultants help people schedule automated savings transfers or debt payments right then and there. Designated savings accounts with vivid labels separate funds for goals from daily spending balances, making future benefits and progress very clear.

For more detail on the program, read the full report.

The results of the latest phase of the Financial Health Check 12 months after the call demonstrate the potential power of using behavioral science to support financial goals. That’s why we don’t plan to stop here. We’ll explore other delivery channels and digital strategies to continually improve the program, with the aim of strengthening financial health and resiliency for people and their families.