Many Americans experience “windfall moments” – sudden periods of additional cash flow– at some point in the year, be it from getting a side gig, unexpected cash gifts from friends or relatives, a big tip from a customer, and more.  With 78% of Americans living paycheck to paycheck, these moments of additional cash flow provide a window of opportunity for many to build their emergency savings, invest, and/or settle bills. For many financially vulnerable people (usually middle and low income earning households with little to no savings and assets), the most significant and predictable windfall moment comes during tax time; the federal tax refund is often the largest sum of cash many American households receive all year, amounting to as much as 20% of annual household income. By implementing timely, simple, fun, and engaging savings tools, employers and financial institutions can enable employees and customers to leverage these windfall moments to boost their savings.

One example of how to encourage people to take advantage of windfall moments to build financial security is the SaveYourRefund campaign developed by Commonwealth and offered in partnership with America Saves. SaveYourRefund is an incentive-based promotion that encourages tax filers to save a portion of their refund and potentially win cash prizes.

Form 8888 allows all American tax filers to split their refund, enabling them to use some to meet basic expenses while automatically directing a portion into a savings vehicle of their choice, like a savings account, certificate of deposit, IRA, prepaid card, savings bond, or Treasury Direct account. SaveYourRefund offers chances to win one of 100 prizes of $100 to participants who use Form 8888 to save by completing an entry form on the SaveYourRefund website. Participants can also enter a photo contest – with an accompanying narrative of how they would use the prize money – for a chance to win one of two grand prizes of $10,000. SaveYourRefund’s combination of a financial incentive, game-like feel, and low barrier to entry create a powerful mix to incentivize and support savings during the tax time moment.

Since its inception, over 18,000 entrants have saved more than $15 million. In 2019 alone, nearly $2.5 million has been saved with an average of $834 per tax filer. 38% of savers reported to not have planned to save before knowing about SaveYourRefund. In addition, a total of $101,921 in U.S Savings bonds were purchased.

SaveYourRefund is just one example of how accessible, fun, and simple savings interventions can drive financial security at windfall moments. The tax refund moment provides ample unexplored opportunities for employers and financial services providers to use incentives to drive and reward behavior. While tax-time is often the biggest windfall moment of the year for financially vulnerable people, it’s not the only one. Some other moments include: increase in wages, “side gig” opportunities, bonus payments, and winning a prize-linked savings raffle. Financial institutions and other nonprofits in the financial security field have an important role to play in capitalizing on these windfall moments to help financially vulnerable people. To learn more about using prizes and other saving strategies to leverage windfall moments, contact Mariele McGlazer at info@buildcommonwealth.org.