Financial Wellness

Most financial wellness programs don’t work

Most financial wellness programs don’t work

Changing behavior is hard. Have you ever abandoned a new workout regimen, blown your budget on something you didn’t need, or eaten something your doctor told you not to? Just because we want to do something good for ourselves doesn’t mean we will.

The stubbornness of our behavior has a negative impact in many areas of our lives, and the use of financial wellness benefits is one of them. These benefits require employees to change their behavior—both to adopt them and use them consistently—and as a result, employees tend to underuse these benefits.

Changing behavior is not easy, but it is eminently doable. More than a century of research from behavioral science has given us insights on the psychology that either promotes or impedes behavior change. Designers of financial wellness benefits can use this knowledge to build benefits that are easy to adopt and engage with.

1. People want different things at different times

We think we know what we want, but our actions often betray us. We want to save money, so we commit to spending less. But it’s often hard to resist the temptation of the things that we want to buy.

Recognizing that what we want is inconsistent over time, many of us turn to pre-commitment strategies to help us avoid temptation. For example, people choose savings accounts with withdrawal penalties and limits. They also sidestep temptation by saving future salary increases and via automated paycheck deductions.

Designers of financial wellness benefits should keep in mind that, although prospective users may always want to be financially healthy, making beneficial decisions is easier at some times than others. Pre-commitment works because it helps people make a healthy choice when they’re thinking about what they want in the future — not when facing down temptation in the moment.

2. People are overwhelmed by too many (or too complex) choices

Even once we decide to take action, we can become paralyzed by the number of possible actions we could take. We want to spend less, but it’s not immediately clear how much we should cut back or how to best plan ahead.

If too many or too complex choices overwhelm people and can lead them to make less-than-optimal decisions, then what can we do to help people avoid this paradox of choice? We need to build scenarios with far fewer options that are easier to navigate. Here are three relevant principles from behavioral science:

  • Default effect — People are more likely to choose an option if it’s pre-selected for them. For example, employees are much more likely to save for retirement when they are automatically enrolled in a 401(k) plan.
  • Social norms — People use the actions of others as a cue for how they should behave. For example, when people learn that others in their community spend less than they do, they spend less and feel better about it.
  • Framing — People make different choices depending on how their options are framed. For example, people are more likely to save a tax refund when it’s described as a rebate instead of a bonus.

Too many choices or overly complex options can be overwhelming and lead to suboptimal decisions. Effective financial wellness benefits don’t ignore these principles or even try to counteract them. Instead, they deliberately build around them so people can naturally do the healthy thing.

3. People want to be self-reliant

Even if we struggle with doing what’s best for ourselves, and navigating the choices available to us, we still want to feel in control. From rats to pigeons to monkeys to people, animals prefer the opportunity to make their own choices, and thrive as a result. Self-efficacy, people’s beliefs about their ability to control things in their lives, is important in all domains — and finance is no different. People with higher financial self-efficacy feel better about their financial situation and engage in better financial behaviors.

So rather than offering generic advice or forcing behavior, an effective financial wellness benefit helps its participants keep and grow financial self-efficacy, empowering them to take ownership of their financial life. This allows employees to adapt a benefit around their financial preferences and circumstances, rather than the other way around. Indeed, employees adopt personalized wellness programs at higher rates.

Tying it all together

Behavior change is hard, and most of us are creatures of habit. To be effective, financial wellness benefits must make money easier to deal with, while also managing the complexity of human psychology. These programs should take into account that people want different things at different times, are overwhelmed by too many or too complex choices, and want to be self-reliant.

Here at Even, we have kept these psychological principles (and more) in mind when designing the Even app.

People want to save money, but it’s often hard to resist the temptation to spend

For this reason, our Automatic Savings feature allows employees to pre-commit to saving their future earnings as automated paycheck deductions. Once they set up this feature, we do the saving for them. Set it and forget it.

People want to spend less, but get overwhelmed when trying to pick a strategy

To help tackle this complexity, our budgeting feature uses artificial intelligence to analyze people’s bank balances and transactions. With that data, we’re able to reduce people’s day-to-day financial decision making down to a single, actionable number for how much is “Okay to Spend.”

People want to feel like they’re in control of their own financial decisions and future

Our Instapay feature empowers people to take charge of when they can access their paycheck early should they need to do so. Rather than rely on an arbitrary payday schedule, employees can use Instapay to access their earnings on demand.

The result? A financial wellness program that works

With an understanding of how to effect behavior change, we’ve built a product that works with — rather than against — people’s psychology. The result is better adoption, engagement, retention, and satisfaction. A recent analysis¹ of Even’s impact showed that:

  • We have over 370 thousand active members
  • 25% of employees at our largest partner are actively using Even
  • 50% of our members are still subscribed after one year

With more people using the app more often, and for longer, Even has an opportunity to help improve financial wellness. Indeed, the same study mentioned above found that three out of four members say the app has had a positive impact on their financial health. And as we already know, better financial health for employees means better results for businesses.

If you’d like to learn more, visit us at or send us an email:

¹Even Responsible Finance, internal data analysis, February 2019

Want to learn more? Download our newest e-book: A Guide to Financial Wellness: The Employer’s Handbook for Understanding On-Demand Pay and Financial Wellness Benefits.

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