Systems Change: Building Emergency Savings at Scale

When Financial Health Network joined with the Emergency Savings Initiative in 2019, we believed we’d be working on a “silent crisis” where nearly one in four Americans couldn’t easily access $400 for an emergency, impacting not only their households but also their communities. Then 2020 happened. If there was ever a need for emergency savings, the pandemic laid it bare as income dried up suddenly for millions of households.

For many, emergency savings are fundamental to provide the cushion that is the difference between having enough to eat, pay rent, get gas for the week — and going without, missing bills, incurring late fees and other debts.

Today, as a member of BlackRock’s Emergency Savings Initiative (ESI), along with our industry colleagues Commonwealth and Common Cents Lab, we are thrilled to welcome the initiative's newest partners including ADP, Best Buy, Self, Truist and Varo.

Our new Emergency Savings Initiative partners — who come from varied sectors — understand how important emergency savings are for their employees, customers, and all the people their systems touch. They join our other ESI partners such as Mastercard, UPS, and Voya, all of whom have made meaningful strides in bringing emergency savings into the foreground.

Systemic barriers to savings are all too real for many Americans. For low- and moderate-income households, income is one part of the puzzle but so too are access, affordability, and institutional support.

Black individuals spent down their savings at much higher rates during the pandemic — and used more high-cost debt to make ends meet. One in four young Black individuals have no savings at all. Nearly half of all women (47%) don't have that $400 cushion, according to ESI’s analysis of the 2020 Financial Health Pulse, and women endure greater levels of money-related stress. The latest FinHealth Spend Report 2021 showed that Americans paid $303B last year in fees and interest on financial services. Of that, $80B was for single payment credit such as payday loans, some of which could be deterred with, you guessed it, greater emergency savings. 

The government stimulus last year provided a kind of object lesson in emergency savings, revealing that when financially vulnerable households were given access to extra liquidity, they had to use it on basic necessities. We shouldn't have to wait for government intervention to always provide such a safety net. When a worker receives a paycheck, or an individual gets a lump sum, such as a tax refund, they should be able to easily save some or all of it. 

That’s the work BlackRock’s Emergency Savings Initiative is undertaking. Today, research from our teams, innovative implementation with partners, and the Initiative’s influence on new savings products are key in making this happen at scale.

For example, ADP, a new ESI partner, is the payroll provider for one in six Americans; the opportunity to offer access at scale is massive by adding tools to save into its ecosystem. Another Emergency Savings Initiative partner, UPS, made headlines last fall when it announced it would work with its 401(k) recordkeeper Voya and Commonwealth, to develop an emergency savings program that leveraged its existing retirement program for 90,000 employees. And with Voya as the first recordkeeper to join the Initiative, we have the opportunity to reach millions more people in its network.

The Emergency Savings Initiative is building off of behavioral research from our industry experts — such as how to enhance participation in savings with messaging and automation — in its partnerships with major employers and with banks and fintechs as well. Those interventions have the potential to reach hundreds of thousands more people. Large employer support for building emergency savings, such as with new ESI partner Best Buy, is crucial to increasing financial security among employees and adds momentum to make emergency savings a new standard workplace benefit.

We partnered with the BlackRock’s Emergency Savings Initiative team because we believe business has a critical role to play in improving the financial health of its employees and customers.  

We hope that more employers and industry leaders will step up and support this important work to help more Americans build emergency savings. To learn more about the BlackRock’s Emergency Savings Initiative program, industry partners and our research, and the important work that has already been done, please visit SavingsProject.org.