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Evidence-Based Strategies to Build Emergency Savings

Evidence type: Review i


The Consumer Financial Protection Bureau’s (CFPB) Start Small, Save Up initiative helps promote the importance of building a basic savings cushion and of good saving habits among Americans. The overall goal of the initiative is to increase Americans’ financial well-being through opportunities to save and to empower consumers to realize their personal savings goals. This review is important in that it aims to enhance the evidence base of the initiative by providing insight into current innovations in the savings space and identifying promising strategies to encourage saving. The review is directed at researchers, policymakers, and practitioners and aims to provide a broad view of the savings-related research landscape and to help identify promising practices, as well as gaps where additional future research might be most useful.

The study

The review focuses on literature that examines strategies aimed at increasing savings available for financial emergencies or other short-term needs: liquid savings. It also includes some insights from other literature, such as retirement savings literature, to inform and provide context for the liquid savings findings.

The authors primarily selected studies for review that employ rigorous evaluations and methods, including randomised field studies and laboratory experiments.

The literature reviewed includes interventions and strategies for increasing savings that fall into three broad categories, each identifying an avenue through which to increase consumers’ savings: savings products (providing a ready place to save), financial incentives (providing motivation to save), and behavioural and psychological approaches (providing a choice environment that facilitates saving).

The review was commissioned by the Consumer Financial Protection Bureau, a U.S. government agency that makes sure banks, lenders, and other financial companies treat consumers fairly.

Key findings

The findings are also organised into the same three categories: savings products; financial incentives; behavioural and psychological approaches.

Savings products:

  • The evidence suggests that introducing or expanding access to low-cost savings products does increase both the take-up of these products and the amount saved.
  • Consumers are sensitive to fees for these products.

Financial incentives:

  • The review focuses on four approaches to providing consumers with financial incentives to save: interest rates, matched savings, prize-linked savings, and one-time incentive payments.
  • Modest interest rises lead few to save more, but there is some evidence that more substantial rises are more effective.
  • Matched savings can be effective – but it’s not clear how match rates affect the amount saved
  • The literature is limited on prize-linked savings but lab experiments suggest that people respond well to them
  • Small one-time incentives have been found to increase the amount saved

Behavioural and psychological approaches:

  • There is evidence that, on balance, external commitment devices (such as withdrawal restrictions or penalties), internal commitment mechanisms (such as earmarking savings for a specific purpose), and peer monitors and reference groups can all help improve short-term savings outcomes.
  • However external commitment devices may impose penalties on individuals without commensurate increases in savings balances, earmarking savings for a specific purpose may encourage costly borrowing rather than dissaving when spending is required, and peer comparisons may be demotivating.
  • There were insufficient studies available to draw conclusions on whether and how the various forms of commitment affect individuals differently across the socioeconomic spectrum.
  • It was also not possible to make direct comparisons of the relative effectiveness of external commitment, psychological motivation, and peer effects.

Points to consider

  • Methodological strengths/weaknesses: Overall, the papers chosen were rigorously conducted randomised controlled trials or experiments, and were based on US markets, so the approach was methodologically strong.
    • The paper gives a detailed discussion of the approach taken to the review, the papers included and excluded, and the limitations of the approach.
    • Some of the limitations included:
    • Lack of access to more holistic measures of trial participants finances
    • Trials based on interventions over months rather than years, when the aim is to build long-term savings
    • Some non-US studies included, with findings which could not be reliably transferred
  • Relevance: Important insights into strategies to help consumers build a saving pot
  • Generalisability/ transferability: The specifics of the savings products and markets mentioned relate to the US and aren’t transferrable, but the strategies and innovations, as well as the insights about motivations should apply more broadly
    • This review would be of use to providers of savings products, and anyone with an interest in helping consumers to build up savings such as government, support agencies or educators.

Key info

Client group
Year of publication
United States
Contact information

Caroline Ratcliffe, Jeremy Burke, John Gardner, and Melissa Knoll.

Consumer Financial Protection Bureau’s Office of Research.