Post on 15-Apr-2017
transcript
June Puett Lindsay Ferguson Barb O’Neill
Goals: Integrate America Saves Week into Extension Programs Savings Behavior Update
Savings: Make It Automatic!
Savings Behavior Research
Financial Fragility Data May 2016 Federal Reserve Board study: • 46% of adults said they either could not cover an
emergency expense costing $400 or would cover it by selling something or borrowing something
• 31% of non-retired respondents had no retirement
savings or pension http://www.federalreserve.gov/2015-report-economic-well-being-us-households-201605.pdf
2016 EBRI Retirement Confidence Survey (RCS)
• 69% of workers (or their spouse) had saved for retirement
• Considerable gap between workers’ expectations and retirees’ experience about leaving workforce
• 48% of workers (or spouse) calculated retirement savings need
• 54% of workers had < $25,000 saved (excluding value of home and DB pension
– Includes 26% who have < $1,000
https://www.ebri.org/pdf/surveys/rcs/2016/EBRI_IB_422.Mar16.RCS.pdf
2016 America Saves Survey • 2016 survey: 49% of 1,004 respondents save at least 5%
of income
• 43% save automatically outside of work
• 40% report good or excellent progress in “meeting their savings needs”
• Those with “a savings plan with specific goals” save more successfully than those without a plan
http://www.americasavesweek.org/less-than-half-of-u-s-households-report-good-savings-progress-according-to-9th-annual-america-saves-week-survey/
National campaign Uses principles of social marketing and behavioral economics to
motive and support low to moderate income households to save money, reduce debt, and build wealth.
Consumer Federation of America founded in 1968. 270+ nonprofit pro-consumer groups
• Annual opportunity to promote positive savings behavior. • Chance for individuals to assess their own saving status. • Use creative delivery methods (media, classes, events, etc.)
Audiences: • Internal- Coworkers, students, staff members • External- Extension clients, community at large, partners
America Saves Week 2016 Results
• Reached nearly 34 million individuals • 384,600 people reached through community events, financial
counseling and workshops, and tax sites • 40,164 individuals pledged or repledged to save • More than 2,000 organizations signed up to participate • 34 America Saves Designation of Savings Excellence Recipients
– 15 banks & 19 credit unions • 16 states or cities proclaimed a week as America Saves Week
Learn More
AmericaSaves.org AmericaSavesWeek.org
America Saves Week 2017
1. Sign Up at AmericaSavesWeek.org 2. Plan Activities 3. Download Materials 4. Participate at any level- large or small
BENEFITS: • Recognition as participating organization • Emails and reminders from America Saves • All materials co-brandable
Resources for Organizations
• Posters and fliers • Content for
websites, newsletters, and social media
• Press releases • PowerPoint
presentations
Themes:
• Monday: Save Automatically/ Save For Emergencies/ volatile income
• Tuesday: Family Savings Day
• Wednesday: Save For Retirement – Choose to Save / myRA
• Thursday: Saving at Tax Time/ SYR
• Friday: Debt and savings
Embeddable pledge form
I pledge to save money, reduce debt,
and build wealth over time.
I will encourage my family and friends
to do the same.
Benefits of the Pledge
• 1st step in commitment to saving • Simple savings plan • Goal-based emails • Savings challenges & eWealth Coach • Text messages • Communication opportunities with Savers throughout
the year
Local Campaign Pledge on Website & AmericaSaves.org
Motivational Resources
America Saves - Monthly Email with Tips and Advice
Quarterly E-News with Information and Stories
Military Saves - Monthly Email with Tips and Advice
Motivational Resources
Goal-based texting tips & reminders encourages continued saving.
Text Examples: America Saves: With each savings deposit, you are one step closer to getting out of debt. Have you made your deposit this month? Reply YES or NO. America Saves: Need to pay off debt from last holiday? Pay off debt with double-digit interest rates. http://bit.ly/14j3CkX America Saves: Once a month, use records to review what you've purchased. Reallocate some of this spending to emergency savings.
• Mini-grants • Reporting survey –use as a planning tool • 2017 Digital Kit • I’m Saving For… contest • eXtension Financial Challenge • Webinars • Video contest
National Extension America Saves Week Programs
Savings Promotion Resource Kit archived at https://njaes.rutgers.edu/money/savings-promotion-resource-kit/
Archived eXtension Webinars Savings Strategies for Military Families (2/16): https://learn.extension.org/events/2344 Investing With Small Dollar Amounts (3/15): https://learn.extension.org/events/1717 Calculating What to save for Retirement (2/15): https://learn.extension.org/events/1716 Savings Strategies for Non-Savers (2/14): https://learn.extension.org/events/1426 Saving Money: Research Insights (2/14): https://learn.extension.org/events/1442
Savings Challenges http://articles.extension.org/pages/73884/monthly-investment-message:-july-2016
Tax Time Savings • Volunteer Income Tax Assistance • SaveYourRefund.org contest • Tennessee Saves You Tube video: https://www.youtube.com/watch?v=5etDEnKColo
How can we alter savings behavior?
Characteristics of Successful Savers
• Grinstead et al. (2011) study of IDA program participants in American Dream Demonstration
• About 4 of 5 low-income working families are “asset poor” with < 3 months expenses at the federal poverty level to survive a financial crisis
• Hours of participation in financial education program, higher matched cap, prior use of a savings account, and greater educational attainment were associated with greater likelihood of savings and saving goal achievement
http://www.afcpe.org/assets/pdf/vol_22_issue_2_grinstead_mauldin_sabia.pdf
Implications •Learning needs vary. Financial education should be tailored and individualized (e.g., financial coaching)
•Peer financial counseling is a low-cost option to savings coaches
•High match rates and match caps motivate people to save
•Provide a link between people’s saving goals and financial education content
Characteristics of Successful Savers
• Rha et al.(2006) study of the effect of “self-control mechanisms on saving behavior: SCF data
– (e.g., saving goals, anticipation of future expenses, saving rules including saving regularly or saving one family member’s income)
• Household saving behavior was strongly affected by mechanisms that help people practice self-control; 56% spent < income
• Households with savings rules were much more likely to spend < income than those without rules
http://www.afcpe.org/assets/pdf/vol-1722-self-control-mechanisms.pdf
Implications •Behavioral variables affect savings behavior at all income levels
•Help people establish realistic personal “savings rules”
•Help people anticipate future financial planning needs
•Teach financial goal-setting and provide tools with which to do it
Savings Barrier: Exponential Growth Bias
• “Tendency to linearize exponential functions when assessing them intuitively”
–People severely underestimate how much interest they earn on savings or pay on credit cards
• Biased people borrow more, save
less, and favor shorter maturities
• Stango, V. and Zinman, J. (2009), Exponential Growth Bias and Household Finance. The Journal of Finance, 64: 2807–2849.
Implications •Teach The Rule of 72 so people understand “doubling periods”
•Use hands-on activities to illustrate the effects of compound interest on debt and savings
– http://rci.rutgers.edu/~boneill/assignments/sliderule1.html
– http://rci.rutgers.edu/~boneill/assignments/sliderule2.html
Savings Resource: Visualizing the Future
• People need to visualize the future impact of their savings
• Many people are not good with long-term decisions
• Hal Hershfield (NYU) et al.: people save more money after being shown digitally altered pictures of themselves at older age
• http://www.marketingpower.com/aboutama/documents/jmr_forthcoming/increasing_saving_behavior.pdf
Implications •Show people what they could look like:
– http://faceretirement.merrilledge.com/
– http://in20years.com/
•Show people how much money they can lose by not saving: http://rci.rutgers.edu/~boneill/assignments/sliderule2.html
Savings Resource: Prize Linked Savings (PLS)
• People are more likely to save when offered the chance to win cash or prizes
• PLS products more effective at inducing savings than standard interest-bearing accounts offering the same expected return
• Controlled experiment by Filiz-Ozbay (U of Maryland) et al.:
http://www.nber.org/papers/w19130
http://econweb.umd.edu/~ozbay/savings.pdf
Implications • Combine features of savings and a lottery, especially for low-income people who view lotteries as a form of financial planning (not necessarily irrational) • Resources: http://www.savetowin.org/ http://saveyourrefund.launchrock.com/ http://www.d2dfund.org/ http://blogs.wsj.com/economics/2013/06/21/promise-of-prizes-helps-people-save/
Savings Resource: Text Messages
• Karlan et al. (Yale): conducted experiments with text messages
• Even low-income bank customers managed to save part of their income when nudged by regular text messages
• “Reminders will be more effective when they increase the salience of a specific expenditure”
• http://karlan.yale.edu/p/Top-of-Mind-April2010.pdf
Implications • Regular “nudges” can motivate people to save
• Text messages are an effective motivational tool
• Reinforce the connection between saving and specific financial goals
• Brain studies: imaging a future goal is almost as powerful a “zing” as achieving it (e.g., buying a car)
Be Creative! Have Fun!
Contact us:
Barbara O’Neil, Rutgers University
oneill@aesop.rutgers.edu
Lindsay Ferguson, America Saves lferguson@consumerfed.org
June Puett, University of Tennessee Extension
jpuett@utk.edu