43 goals. We’re currently reviewing data to determine whether the new statements have had the desired effect of encouraging more people to initiate voluntary contributions to their retirement accounts. FOCUSING ON THE FINANCIAL CUSHION As important as it is to save for retirement, people also need savings for the near term. In Chile, we chose to focus on helping people build short-term savings to make it easier to overcome financial shocks, such as a layoff or sudden expense. Because many people borrow in the face of a shock, a savings cushion can help people (particularly those with low or unpredictable incomes) avoid hard-to- break cycles of over-indebtedness. And as with longer- term savings, we know that many people understand the importance of putting money away for a rainy day, but that understanding does not automatically lead to action. What gets in the way? We interviewed customers of CajaVecina to find out. Chile’s CajaVecina system is one of the best-known examples of the agent banking model. In small or rural communities where it would be cost-prohibitive to operate full-service, stand-alone bank branches, the state-owned BancoEstado works with local merchants to co-locate CajaVecina-branded outposts in their stores so customers can conduct basic financial transactions. In our interviews with CajaVecina customers, we found that many account holders experienced  optimism bias: the tendency to think they are less likely than others to experience something negative. In this case, interviewees believed that they themselves had a medium risk of experiencing financial difficulty, even though they also believed that Chileans overall had a high risk of experiencing the same thing. Another behavioral barrier we discovered was a lack of rules of thumb for navigating complex financial decisions. The basic rules that guided people were more abstract (“avoid unnecessary expenses”) than concrete (“save 10 percent of your pay”). This suggests that the financial advice they receive has been vague, which makes it harder to put into action. As a first step, we are currently designing a product and campaign that encourages automatic monthly savings among the tens of thousands of people who operate CajaVecina’s system in their stores. Similarly, in Mexico we’re working with CAME, a microfinance institution that recently launched individual savings products. Though this service could potentially be very helpful to clients, uptake is low, and many who open accounts don’t use them. We uncovered several behavioral barriers preventing people from opening a savings account and saving regularly. The costs of opening an account, such as the minimum opening balance, are immediate, whereas the benefits are in the future. Small hassles like forms and long lines also act as deterrents. Customers who do manage to open accounts do not automatically become habituated to using them. A visit to CAME usually centers on a loan payment, not saving money, so many clients simply aren’t thinking about savings at the time when they could most easily take action—when they’re already engaging with the institution. We’re currently designing a solution to make it easy to open an account, to create savings plans and goals, and to prepare for deposits while already waiting in line for other services—reducing the hassles involved with the process and prompting clients to think about savings as well as loan payments during their visits to CAME. This is just the beginning. To enable financial health for millions, the full spectrum of consumer financial products and services—from retirement savings, to short-term savings, to credit accessibility—should be designed for how real people act, using insights from behavioral science. In the coming year, we will release more information on the impact of these designs. The important outcomes of the partnership between ideas42 and MetLife Foundation can support the wellbeing of many lower-income people throughout Mexico and Chile—as well as create a foundation on which to build future financial innovation in these countries and many others. View the original article on NextBillion