"I can't afford to save money."
It's an all too common refrain, especially for low and middle income (LMI) homes. Seventy-five percent of adults don't have enough savings to cover three months' worth of living expenses, according to a 2022 survey by Bankrate. But a recent
The partnership was supported by investment firm BlackRock's Emergency Savings Initiative, which enabled Commonwealth to conduct interviews and surveys to build data on the struggles LMI workers face when it comes to building savings. That insight was used to make improvements to ADP's Wisely program, which allows customers to receive paychecks on a prepaid debit card, keep track of finances and categorize spending in areas such as their emergency savings accounts.
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"At its core, BlackRock is a business focused on building financial security," says Claire Chamberlain, BlackRock's managing director of social impact. "It's important to save for the long term, but if you're struggling to meet short-term needs, it's a bit tone deaf to remind people of long-term goals."
Emergency savings accounts (ESAs) have never been more important for employees, especially LMI workers, and employers play a key role in making them available. ADP, the nation's largest payroll provider, offers this option to their Wisely card holders, but many employees were not seeking it out as a way to build up financial stability.
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Commonwealth's research identified features that meet the particular needs of households living on LMI, including lack of associated fees and immediate access to savings. To increase participation in the ESA program, ADP adopted evidence-based product enhancements such as customization, automation, gamification and targeted messaging strategies. To further propel usage, marketing materials were developed that focused on emergency savings. As a result, the number of Wisely product users per month more than tripled and utilization more than doubled, driving that more than billion-dollar boost in savings. (ADP is not disclosing the number of participants or the average amount of savings per individual.)
"They took this card and added benefits and features to offer a short-term liquid savings opportunity," Chamberlain says. "Just by adding different ways to use it they were able to collect a significant amount of incremental savings. The gold standard over time for something like liquid savings is opt out, just as it is for retirement. In the meantime, this is an opportunity for employers, just like helping people build long-term retirement savings, and it is something they can do right now."
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The outcome of ADP's transformation of their
"One of the things that's very notable about the ADP results is that most people come with the mindset that people living on a constrained income can't save," Chamberlain says. "Well, it turns out that's not true. What the ADP pilot has demonstrated is that if you make it easy, they can save and build it, use it, build it again, and that's where the protection is. That's the safety net for people so that when things go sideways, they have something to fall back on."
