Tier Savings Continued...
Very modest income
Low annual cash resources
High financial returns on program investments
Goal use restrictions
Responsiveness to program training requirements and deposit benchmarks
Heightened awareness of mandatory engagement
Elevated expectations of success
Mix in some tenets about actions related to finances: none of us really like details, preparation, nuances, complexity, or evaluation. For example, think about…
What you did the last time you were on a phone and a customer service person invited you to stay on the line after your call for a quick survey
How we sense a need to buy before the sale ends (even if the price was marked up)
How your retirement fund automatically supports, at a baseline, the least risky denominator, and how that affects your involvement
How difficult it is to make a choice in the toothpaste aisle (not to mention all of the decisions you don’t make!)
These types of behavioral economics triggers – hassles, loss aversion, power of default and proliferation of choice – can be applied to matched savings programs. IDA participant behavior is the trigger point to build upon and help reenergize the matched savings field. In doing so, we may be able to identify more cost efficient, outcome-relevant designs.
So how would a new, tiered match savings interface with behavioral change? Below is an example of some prescribed match thresholds that a participant can achieve and be “rewarded.” Consider giving your customers the options to “access” anywhere from 1:1 to 3:1 matches based not on the goal itself but the continuation of asset security, i.e. the behavioral shift. The effort is both graduated and optional. For example, at a 2:1 match, the next option may invite them to engage a health specific goal. Let the participant identify the success that brings them to 2.5:1 match. It’s like inviting them to be part of the gold, platinum, and diamond level and while they design the rewards themselves at the same time.
Consider a Tier 1 and Tier 2 engagement. Begin to think about time variants at which a saver attempts a new behavioral exercise and how you can incorporate values that measure and weight applications based on ease of application or impact, and identifying behavioral benchmarks pre and post goal attainment. Do you know how long they sustain the patterns or behaviors? Were behaviors triggered only when the participants were expecting rewards?
Tiered match savings planning: facilitating positive social and financial outcomes
Acquiring or purchasing is often the saver’s first goal, and sometimes the only goal. The win-win for both the saver (consumer) and the program comes in management of the goal and the continuation of positive savings behaviors. For some savers, the goal is a car; for the program managers, it is an economical car and economical use. For a saver it might be a business venture; for the program manager it includes a risk conscious application. These completed efforts model savings beyond tomorrow, in that it is ideally planning in perpetuity.
A tiered matched savings structure not only helps achieve IDA program outcomes but can help encourage participants to sustain their positive actions. So how can you behaviorally link your match plan to a tiered formula for your participants?
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