Round down to Save Up
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Transcript of Round down to Save Up
TO S
AVE
UP!
ROUND
DOW
N
By Sean Doherty
a Raise the Rate Idea
The United States
savings rate is at a
dismal level, despite
an abundance of
opportunities and tools
with which to save.
1975
1985
1995
2005
0%
2%
4%
6%
United States Per-sonal Savings Rate
United States Sav-ings Rate
BACKGROUND
Data gathered from Congressional Research Service:: Savings in the United States: Calculations and Comparisons, by Craig K. Elwell, September 14, 2010. http://www.fas.org/sgp/crs/misc/RS21480.pdf
To develop a plan to increase savings in the United States and to help Raise the Rate of personal savings to 10% over
the next two years.
PURPOSE:
Problem
U.S. savings rate is at a dismal level
Solution
An automatic savings program will help consumers save and thus Raise the Rate
PROBLEM / SOLUTION
Problem
Too many purchases are made with credit cards and other forms of borrowing
Solution
Savings accounts can help consumers plan for large purchases, rather than rely on credit
PROBLEM / SOLUTION
A TREMENDOUS OPPORTUNITY
Everyone knows that money makes the world go round.
But conversations about money generally only refer to lump sum amounts and large deposits. Few people bother to talk about the single dollar bills and spare change.
A TREMENDOUS OPPORTUNITYA secondary flow of money lies underneath the large
deposits, and goes by largely unnoticed.
Charities have partnered with retailers to “round up” purchases and have successfully raised large amounts of donated money from the “under economy” of those rounded purchases.
This ‘under economy’ of ‘loose change’ is not being served and provides a tremendous opportunity! In today’s tight economy, families are looking to stretch every dollar now, perhaps more than ever! But, until now, banks have ignored money that is right under their noses!
An innovative Savings Plan will find new ways to look at money
and banking.
HOW CAN BANKS CAPTURE THIS TREMENDOUS
OPPORTUNITY…
…WHILE SERVING THE BEST INTERESTS OF THEIR
CLIENTS?
(AND WILL THE PLAN RAISE THE RATE?)
PROPOSAL
• Develop an automatic savings plan
• Involve the major banks, credit unions, and community banks
• Allow banks to be creative
• Popularize the idea within U.S. culture
• Have fun!
Round Down to Save Up: Check deposits are rarely in round, whole number amounts ($200 or $1,000, etc.). Rather, deposits usually end up with decimals and ‘loose dollars’ ($214.76 or $1,483.01, etc)
A healthy savings program can be developed by using those ‘loose dollars’ and the ‘spare
change.’
DEVELOP AN AUTOMATIC SAVINGS PLAN
An effective Savings Plan will involve automatic deposits and will find sources of income that
are relatively untapped.
Banking customers will be presented with the option to enroll in an automatic savings account program to maximize the power of their ‘loose dollars.’
Option 10: checking deposits are rounded down to the nearest multiple of
ten with the rounded amount being automatically placed into the client’s
saving account.
$256.43 becomes:
$250.00 in checking
$6.43 in savings
$2578.99 becomes:
$2570.00 in checking
$8.99 in savings
ROUND DOWN TO SAVE UP
A feasible Savings Plan will take place automatically without the
hassle of continuous action by the client.
Consumers who are committed to strong savings goals will be able to round down in larger amounts, thereby increasing the amount contributed to savings.
Option 20: round down to multiples of 20
$278 becomes $260 in checking, $18 in savings
Option 50: round down to multiples of 50
$1,490 becomes $1,450 in checking, $40 in savings
GREATER SAVING POWER
Encourage participation from banks of all shapes and sizes by designating a contest winner for each category:
INVOLVE BANKS
Large-size banks
Mid-size banks
Small-size banks
Credit Unions
Community banks
ALLOW BANKS TO BE CREATIVE
Free banks to be creative and innovative. How? By developing an initiative with goals, but by giving banks only minor direction on how to fulfill it. Each bank will, in competition, develop their own best practice ways to out compete the others.
When banks can freely compete- in the interest of serving their consumers by increasing savings deposits- then they will develop innovative and creative methods to attract new customers and encourage use of their savings accounts.
WHAT WILL CREATIVITY IN BANKING MEAN?
Rather than just following a plan to increase savings, banks that are
competing for top deposits might:
Develop attractive incentives for new savings accounts
Implement visualization tools to help clients visualize their savings goals becoming a reality.
Coach clients to save money regularly, with each paycheck.
Develop new mobile apps!
Make it fun and interesting
- the name says it all: Round Down to Save Up!
- A great complement to the Raise the Rate theme
Make it viral:
-Facebook and social media
-Competition among banks means new programs and incentives to save.
-New programs and incentives will fuel workplace discussions and friendly competition among family and friends
POPULARIZE THE IDEA
Imagine bankers asking their clients:
“How do you manage your ‘loose change?’”
WHAT WILL THIS LOOK LIKE?
Imagine friends saying to one another:
“What do you do with your ‘loose change?’”
And most important, picture clients saying:
“This savings plan has really paid off. I’m so glad I began to ‘Round Down to Save Up!’”
Thank You!Thank you TIAA-CREF for the sponsorship of this contest and for the work done to
help Raise the Rate!