Encouraging savings, rewarding effort

Saver Plus: Encouraging Savings and increasing financial capabilities among low-income families

Roslyn Russell, Sandra Mihajilo, Aruna Nair and Robert Brooks

This presentation…..

• Provides an overview of the 2005 evaluation results of Saver Plus

• Highlights the key success factors of the program

• Gives current directions of Saver Plus

Saver Plus

Saver Plus is a program designed to help families on low income improve their levels of financial literacy, develop a

savings habit and build assets for educational purposes

Saver Plus

• Initiative of ANZ Banking Corporation and Brotherhood of St Laurence

• Delivered through partnerships with four community organisations:

– Brotherhood of St Laurence (Victoria)– Benevolent Society (NSW)– Berry Street Victoria (Victoria)– The Smith Family (QLD)

Partnerships

Saver Plus ManagementCommittee

(ANZ and the Brotherhood of St Laurence)

Project ManagerBrotherhood of St Laurence

Brotherhood of St

LaurenceRelationship

Manager

The Benevolent

SocietyRelationship

Manager

Berry Street Victoria

Relationship Manager

Participants Participants Participants

Primary Partners

Research and

evaluationRMIT

The Smith Family

Relationship Manager

Participants

Implementation Partners

SP Design Features - Pilot

• Case management– Recruitment– Support– Facilitate education

• Financial education• 2 for 1 matching (limit $1000)• Restricted goal: Secondary School education costs

Eligibility Criteria

• Health Care Card Holders($599 - $741p/week + $34 each child)

• Child in secondary school

• Some paid employment

• Demonstrated capacity to save

Saver Plus locations & numbers

• Four locations:– Frankston, Victoria 177– Shepparton, Victoria 125– Campbelltown, NSW 49– Brisbane / Gold Coast 101– Total 452**(nos. of commenced, 408 completed)

Evaluation Aims

• Degree of success in meeting savings goals

• Levels of improvement in financial capabilities

• Identify enabling / inhibiting factors for success

• Identify other flow-on effects from participating in the program

Research process

• Questionnaire at commencement• Questionnaire before undertaking financial

education• Final questionnaire • Focus groups: during program and three

months after completion• Interviews with staff• Banking data

Participant Numbers

• Total 452• Analysis conducted on 399 participants• 44 withdrew • 11 did not want to take part in the research

Demographics

• Average age 42 years• 97.8% are female• 32.56% couples• 67.44% sole parents• On average participants have 2.3 dependent

children • Average age of the child is 12 years

Language, ethnicity and education levels

• 94.2% speak English as their first language

• 2.14% identify as Aboriginal or Torres Strait

Islanders

• Most common education level: partial completion of school education followed by a subsequent qualification from TAFE / other (44.17%)

Employment & Income

• Employment – Full-time 11%– Part-time 41%– Casual 38%– Not employed (partner working) 11%

• Main sources of household income– Paid employment 43.68%– Government benefits 56.23%– Average family income (after tax) $659.77 p/week

Motivations to Join Saver Plus

• Opportunity to get matched funds

• Opportunity to get financial literacy training

• Support and counselling

• Learn how to save

80.2%

3.95%

0.79%

12.25%

Savings and money management prior to SP

Prior savings levels

Less than $50 24.2%

$50 – 199 24.56%

$200 – 599 19.57%

$600 – 999 10.32%

$1000 – 2999 12.81%

$3000 – 4999 4.27%

$5000 + 4.27%

Past saving and spending behaviour

Past Savings Behaviour

Tried to save when possible 52.79%

Saved only for specific item 25.28%

No point trying to save 19.33%

Saving isn’t important 2.6%

Past Spending Behaviour

Spend all income 27.51%

Feel out of control with debt 13.43%

Could manage if lost income for a short period of time

64.44%

Have problems setting money aside for major financial outlays

40.52%

Have worked out how much is needed for retirement

7.43%

Have long-term financial plan 15.24%

Financial products used

Solely Jointly Both Do not have

Ordinary bank account with a bank, building society or credit union

72.01% 15.67% 8.21% 4.10%

Vehicle insurance 60.07% 20.52% 4.10% 15.30%Superannuation 68.28% 2.61% 5.22% 23.88%House or contents insurance

45.90% 23.51% 3.36% 27.24%

A home mortgage 19.40% 19.78% 1.87% 58.96%

A personal loan 22.39% 6.72% 0.75% 70.15%

Private health insurance 8.21% 9.33% 0.75% 81.72%

Shares 12.69% 3.73% 1.49% 82.09%

Managed investments other than superannuation

11.19% 2.61% 1.49% 84.70%

A lease or hire purchase agreement

5.22% 5.22% 1.12% 88.43%

Term deposits 8.21% 1.87% 0.37% 89.55%

An investment property 1.49% 2.99% 0.37% 95.15%

Financial literacy factors

Factor Entire sample score

Day-to-day banking 14.03

Convenience banking 8.90

Investment and credit 9.56

Cards 10.59

Levels of success

Meeting the Savings Goal - All Participants

5.54%

58.89%

35.57%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

Did not meet goal Met goal Exceeded goal

95% of participants met or exceeded their goals

Savings goals

• Average saving goal • Average balance

saved– Monthly balance

• Participants aimed to save the maximum of $1000

$964

$1,214

$125

90.1%

Saving behaviour (cont)

• Those who saved more:– Earned more (equivalised weekly income)

– Single income, full-time employment

– Primary income was paid, not govt

– Previous savers

Patterns of saving behaviour & average final balance

n % Mean

Consistent - (no withdrawals, did not miss a deposit, deposits made with a standard deviation of less than $10)

0

Consistent / Variable - (no withdrawals, did not miss a deposit, deposits made with a standard deviation of more than $10)

103

34.45

$1,327.79

Withdrawer 148 49.5 $1,212.48

Sporadic – (missed 1 or more deposits) 48 16.05 $1,018.50

Enabling factors assisting saving

• Using auto deductions from salary

• Motivated by incentive

• Knowing that education costs were going to be covered for the year

• Establishing a steady habit of putting the money aside

• Determined attitude to succeed

Difficulties in saving

Around 27% had difficulties in saving during the program– Unexpected bills– Reduced hours of employment– Major illness

Financial education

• Approximately 90% were satisfied or very satisfied • Over 80% of participants found the workshops to be useful

or extremely useful– (3.95% were motivated to join because of the

opportunity for financial education)• Benefits:

– Meeting other people, forming networks and social connection

– Increased confidence levels– Practical tips on saving and identifying spending leaks– Distinguishing between ‘needs’ and ‘wants’

Changes in money management behaviour

• 96% of focus group participants reported an increase in their abilities to manage money better– Budgeting– Use of credit– Spending leaks– Choosing products– Establishing contingency savings fund– Learning e-banking– Longer term planning of expenses

Saving 3 months Post-Saver Plus

• 85% still saving

– 44% same amount

– 20% more

– 34% less

• Most common amount $76 – 100 per month

Effects and benefits of the program

• Participants reported– A greater propensity to plan for the future– A more positive outlook on life– A greater level of confidence– A sense of achievement in reaching a goal– Increased self-esteem– A significant reduction in stress levels

• 99% reported a positive experience in the program

Benefits (cont’d)

• Top three benefits– Getting the matched funds 34%– Getting what we saved for 33%– Reduced stress about

school costs 28%

• Evidence of change in perceived benefits from when joined i.e. 80% of participants were mainly motivated by getting the matched funds when they commenced the program

Other outcomes

• Developing a savings habit

• Gaining confidence in handling finances

• Started their children on savings programs

• Positive effect of the purchase on the child’s schooling

• Sharing information, establishment of networks

• Established more goals

Key success factors of pilot

• Holistic approach • Collaboration between ANZ and Community organisations • Dedication and commitment of staff involved• Evaluation from beginning, not an afterthought

‘The whole is greater than the sum of its parts’– Partnerships– Financial education component– Relationship managers– Incentive (co-contribution arrangements)

Saver Plus 2006 - 2008

• New Partner: Department of Victorian Communities

• Expanded to 18 sites in Vic, NSW, Qld, ACT• Eligibility criteria includes saving for adult

vocational education and primary education• Goal to involve over 5000 participants