2018 is an exciting year of new work at Commonwealth. A few highlights of our year ahead include exploring new financial challenges faced by the financially vulnerable, testing new solutions to those challenges, and collaborating with partners to scale initiatives.
Financial Challenge: Workers worry about tax time.
We surveyed 1,000 workers with a household income of $55,000 or less, and 40% of those in self-identified traditional jobs told us they worry about owing money at tax time. Even more (43%) reported they were concerned about having the correct receipts or paperwork at tax time. Surprisingly, workers in non-traditional jobs, such as temp workers, subcontractors and gig economy workers, were slightly less concerned (34% worried about owning money at tax time). This data points to an under-examined financial challenge, and possible solution areas (why do employers collect worker tax withholding rates at hire, yet never revisit them?). We have long been focused on the tax refund moment being an opportunity to build financial security. In 2018, we will continue this focus while also engaging in a deeper exploration of taxes as a financial challenge by talking to more workers about their experiences.
Solution: Integrated products reflect actual financial lives
People’s financial lives are more deeply interconnected than traditional financial products suggest: income impacts expenses; expenses impact savings; savings impacts borrowing; borrowing impacts expenses; and uncertainty impacts everything. Products that fail to acknowledge these interdependencies optimize one financial function at the expense of the whole. What might be possible if products were designed that integrated financial functions into one tool, and thus better serve all the needs of those who face financial vulnerability? In 2018, we will test this solution through savings products that combine restricted and unrestricted uses in our work to mitigate the risk of High Deductible Health Plans, and the opportunities receiving a raise presents to support workers in building financial security.
Project: Fun and games can unlock access to college
Access to a college education is a key driver of financial security and opportunity. Lack of financial capability for engaging with higher education can lead to students choosing not to continue their education, paying too much for an education, taking on crippling debt, and/or choosing an ill-matched school. Over the past three years, Commonwealth created, piloted, and evaluated Ramp It Up, a gamified app providing high school students with information about financial choices related to college. Last year we published our findings based on testing the app with almost 1,000 students and interviewing with students, educators, college administrators, non-profit organizations, advocacy groups, and private sector companies. The evaluation found that a light intervention can motivate students to show up and – through a combination of educational content and game elements – positively change their confidence and knowledge, and ultimately led them to take action.
Our 2018 focus is to collaborate with partners to bring this tested concept of a gamified app to scale, exploring together how such a tool could fit with existing initiatives and be distributed to have broad impact. We will prioritize collaboration with organizations already working to improve college access – public schools, charter schools, colleges, children savings accounts programs, and state and local government – and look forward to engaging new partners who may not currently focus on college financial readiness, such as financial educators and employers.
As we enter our second full year working to build our common wealth and make wealth common, join with us to explore financial challenges, design solutions and scale proven tools.