Blog Posts

June 26, 2018

Using Science to Improve Financial Well-Being

Andrew Bourne

Over the past few months, our behavioral science team has been researching methods for improving financial well-being. Now, we are internally testing a savings app that is informed by cognitive and behavioral science.

What we have learned

Here are five research findings that are guiding our thinking:

  1. Savings reminders and automated savings programs can help people save more money. These methods work best when synced with a paycheck.
  2. Most people overestimate their financial literacy, and lack an understanding of debt and interest rates. One way to help is by explaining interest rates in dollar amounts instead of percentages.
  3. Financial education does not improve financial behavior.
  4. Making financial decisions simple and reducing complexity is something people value. 
  5. One of the best predictors of a person’s financial well-being is how much money they have saved. 

A smarter savings plan

To be successful, we have to make financial decisions simple. Typically, banks leave it up to their customers to remember to save and to calculate their own savings rate. A smarter approach is to default people into automated savings at a rate we know they can maintain. 

However, we have to be careful with this tactic because about 40% of Americans experience income volatility. We don’t want to automatically transfer funds from their account if they don’t have money in it.

Our solution for this problem is to send savings reminders via text message when money is deposited into their account. The reminder will suggest a recommended savings amount, and ask if they would like to save now. We will transfer the money for them if they respond with “yes.” 

Positive reinforcement 

You can increase the likelihood of a behavior by reinforcing it with a rewarding stimulus. With our savings app, we will use positive reinforcement in two ways: 

  1. Cash or bitcoin rewards for saving money. Unlike credit cards, we give rewards for saving instead of spending.
  2. We’ll send messages that celebrate people’s accomplishments. Reaching a goal, even a small one, is a positive experience that we can reinforce with congratulatory messaging.

After we release the app to the public, we will run experiments to determine the best methods for helping people save more. Since we value transparency, we’re looking forward to sharing our findings, no matter the outcome.


If you have any questions or suggestions, please do not hesitate to reach out to us at

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Using Science to Improve Financial Well-Being

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Andrew Bourne
June 26, 2018

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