As we know from popular culture, when someone stands between you and your rightful money, typically you want them to show it to you.
But while piloting the first version of Even, we learned that when it comes to saving money, people sometimes prefer the opposite: for their money to be hidden away, out of reach — not shown to them.
In Even v1, that’s pretty much how we did saving. When a member made a high paycheck, we would transfer the “surplus” money from that check out of their bank account and into a separate account at one of our partner banks. Anytime they needed some of that money, they’d would send us a support message telling us how much they wanted transferred back. The money would arrive in their account by the next business day (a delay inherent in the banking system).
In designing savings to work like this, the founders of Even were inspired by how people without access to banks often save money by giving it to another person to hold — a “moneyguard”(Collins, Morduch, Rutherford, & Ruthven, 2009). Once I started interviewing Even members, I learned it was common for them to do the same, even though they did have banks. They’d either give money to a relative or friend to keep, or do something else to make the money harder to access, such as keep it in an unlinked account at a different bank. These examples suggested there was some real benefit to keeping savings hidden.
But Even’s particular implementation of moving money to a separate account proved to have significant inconveniences for members. First, members often didn’t want us to transfer the “surplus” from high checks out of their accounts. Although they wanted to save, they had a greater need to maintain the liquidity that ensured they could pay their bills. Second, members disliked having to wait a full business day — or a full weekend, if the transfer were initiated on a Friday — to get money sent back into their accounts. Since they were often withdrawing money because they had an urgent need for it, the delay seriously diminished the utility of their Even savings.
The inconvenience of saving by moving money was actually the number one reason people quit Even v1:
So for some people, Even moving money was really bad.
But for others, as we’d hoped, it was really good: Many members many told me they loved v1’s “Don’t show me the money” approach. One of those members was Bettie.*
A junior in college, Bettie was preparing to apply to medical school when she joined Even. She was already in the habit of saving but wanted to start doing so more aggressively, particularly so she’d be ready to pay multiple med school application fees.
When I caught up with her after a few months of using Even, Bettie nicely summarized both of the reasons other Even members had been giving me for why they liked having savings moved out of their accounts.
Before Even, Bettie saved by putting money into the savings account at her bank. But after starting to save with Even, Bettie told me,
“I use the Even app to save most of my money, because I know if I put it in my savings account, I’ll be like, ‘Oh, I have this money! Let me just use it.’”
Many other Even members told me the same thing—that when their savings were kept at the same bank as their checking, they were constantly reminded every time they logged into their accounts that the money was there, and consequently tempted to spend it. Hiding money in a separate Even account allowed people to “forget” they had that money.
For many of these same members, the ability to “forget” also helped enforce the psychological “separate”ness of their Even savings, keeping them from mentally incorporating them into the “spendable” category.
When Bettie was tempted to spend on non-priorities, the same bank delay that made some Even members want to quit was actually a bonus:
“[Because] it takes some time for the money to get there, it makes me think about if I need the money.”
Many members echoed what Bettie said, telling me how having to ask to transfer the money and then wait for it to arrive forced them to stop and question whether they should really spend it.
Some members specifically said that the “social” component of withdrawing money (chatting online with an Even advisor) made them question what they were doing even more.
Bettie used the money she saved with Even for application fees, as planned, and she’s in medical school right now.
Because of the serious inconvenience to many members, Even decided not to make moving money the default method for saving in Even v2. That’s not to say it definitely won’t be available, but it won’t be the de facto feature that makes sure savings stay saved.
So as we design how saving works in v2, we should take inspiration from what it was about moving money that helped members so much: Moving money made members “forget” about their savings (and emphasized their “separate”ness) and it made them stop and “think” before withdrawing (especially because withdrawing had a social component).
How can v2 similarly make temptation less likely to arise, and harder to give in to when it does?
*Bettie gave permission for her story to be used in this post.
Collins, D., Morduch, J., Rutherford, S., & Ruthven, O. (2009). Portfolios of the poor: How the world’s poor live on two dollars a day. Princeton, NJ: Princeton UP.