By Chandni Ohri, Director, Financial Health Network
In October 2019, Etsy signed on to BlackRock’s Emergency Savings Initiative as one of the inaugural partners because they recognize the challenge and importance of emergency savings for their sellers.
Emergency savings is one of the building blocks to improving financial health. In fact, the recent U.S. Financial Health Pulse 2019: Trends Report highlights that 47% of Americans do not have savings to cover the recommended three months of living expenses, and 12% of people have less than one week of living expenses saved. Research shows that a small amount of savings can mitigate the impacts of unexpected shocks. According to the Urban Institute, families with at least $250-$749 in non-retirement savings are significantly less likely to miss a housing or utility payment, face eviction or receive public benefits.
As small business owners, Etsy sellers — like the majority of Americans — face financial health challenges. Nearly 2 in 5 sellers experience varied or unpredictable incomes. Additionally, Etsy sellers’ personal finances and their business finances can be closely intertwined, making them even more vulnerable to financial shocks.
A savings cushion can serve as a buffer and help mitigate the negative effects of these financial obstacles.
To help sellers improve their financial health, Etsy has set out to better understand how emergency savings solutions can assist in building a financial safety net, and in turn, help them grow their creative businesses.
As part of BlackRock’s Emergency Savings Initiative, Etsy is working with Common Cents Lab, Commonwealth, and the Financial Health Network to identify a suitable savings solution for their sellers. The first step was to conduct an in-depth analysis of the financial lives and challenges of their sellers. This research was conducted via an online survey and drew more than 1,700 responses from Etsy sellers. The research revealed:
- The top three current financial concerns of Etsy sellers are paying off debt (51%), saving for emergencies (42%), and saving for a specific purchase or expense (40%)
- 61% of Etsy sellers had an emergency expense of more than $400 in the last year
- 30% of Etsy sellers are not saving for emergencies currently
BlackRock’s Emergency Savings Initiative team and Etsy are collaborating to identify third-party solutions that can be made available to sellers. While it’s too soon to predict what solutions will be best for Etsy sellers, there are a number of solutions in the market that offer proven features to help people save. These include automated savings, the ability to save for different goals, introducing ‘fun’ into savings through gamification and/or prizes, and providing timely and actionable nudges and reminders.
We look forward to sharing the journey of the Emergency Savings Initiative partners in the coming months, including Etsy’s progress as it advances toward improving their sellers’ financial health. Additionally, more details from the research will be available in an upcoming publication released by Commonwealth.
Learn more about BlackRock’s Emergency Savings Initiative at https://savingsproject.org/.
BlackRock’s Emergency Savings Initiative is a three-year commitment to help people living on low- to moderate income gain access to and increase usage of proven savings strategies and tools to help them establish an important safety net. Led by their Social Impact team, BlackRock, along with nonprofit experts known for their innovative approach to consumer finance, Financial Health Network (formerly CFSI), Commonwealth, and Common Cents Lab, are working to address the crisis and fuel the future of savings innovation. This post is content developed in conjunction with the Emergency Savings Initiative project.