Over a five-month period, MaPS applied this intervention with two providers: Angel Advance, a fee-charging debt management company, and Christians Against Poverty (CAP), a charitable organisation giving free advice. To measure its effectiveness, the study compared change between a treatment group of clients who experienced the nudges and a control group of clients who did not.
- Framing savings as a way to create financial resilience and using mental accounting had the greatest impact among the different nudges used.
- Creating a ‘safety net’ of savings to be resilient against financial shocks, such as unexpected bills, has the largest impact when motivating clients to save with 43% of clients in the treatment group were definitely encouraged to save or continue saving compared to 32% in the control group.
- Framing saving with a specific goal to achieve in a specific time has a significant positive effect in the numbers of clients choosing the savings option on their SFS or its equivalent. 44% of clients in the treatment group found this very useful for them to save or continue saving compared to 33% in the control group.
- Nudges can be used in combination with an automatic saving opt-in when agreeing a debt solution.
- Results also show a clear link between positive financial behaviours and clients who have less time remaining on their repayment term, as well as positive financial feelings and behaviours for longer term clients (with a relationship of six months or more).
We encourage debt advice providers to look at the summary report and use the learnings with the guidance on applying nudges provided to adopt this savings initiative. It is our hope that our findings will influence change across the sector by increasing the use of the savings category and helping more people in debt.