financial apps

Even CEO: Why Savings Is The Key To Breaking The Paycheck-to-Paycheck Cycle

In the paycheck-to-paycheck economy, estimates vary slightly. Some analysts have reported that roughly 65 percent of all U.S. workers now live paycheck to paycheck, and a large fraction of those workers struggle to pay their bills. A PYMNTS study, done in collaboration with Mastercard, found that nearly 30 percent of gig workers — currently more than one-third of the U.S. workforce — live paycheck to paycheck, and have no savings to cover unforeseen expenses in the event of an emergency.

Jon Schlossberg, CEO of Even, told Karen Webster that closing the gap between earned wages and paid wages for full-time and hourly workers was the motivation for the company’s founding. Even is an employer benefit, using software to provide workers with a mobile app that gives them access to their earned wages in advance of the traditional weekly or biweekly pay cycles.

For employers that have made the benefit available to their employees, the results have surpassed even what Schlossberg and his team expected. Fifty-one percent of Even users look at the app every day, and use it to actively manage their finances and spending habits. It’s a measure of engagement that Schlossberg likens to “social media-style engagement,” and goes well beyond what many other personal financial apps struggle to achieve.

The announcement last week that Even would expand its offering to include a personal savings feature, Schlossberg said, was a natural extension of its mission to help workers break the stress and pressures of the paycheck-to-paycheck cycle. In addition to giving workers the ability to tap into earned wages as needed, Even app users can allocate as much as 10 percent of their paychecks to savings, across three different savings buckets.

“It’s a pay-yourself-first model,” he said, likening it to the old-fashioned practice of setting aside different piles of cash in envelopes that correspond to various parts of the household budget.

Big Problems Getting Bigger

Indeed, recent data has pointed to one of the big problems Even is trying to solve: “Over the last 40 years, the economy has made it very, very difficult to save,” Schlossberg said.

It’s common knowledge now that covering a $400 emergency expense would be all but impossible for many consumers, particularly for hourly workers and millennials who have not accumulated enough in savings to cover unforeseen expenses. The concept behind the new savings feature, Schlossberg explained, can be roughly compared to the use of a gym. Planning, positive reinforcement and constant check-ups on the progress being made can keep people on track toward their goals.

Breaking The Cycle

It is still far too early to offer a reasonable view about whether Even will succeed in the long term. However, as Schlossberg told Webster during this recent PYMNTS conversation, some solid signs of encouragement are in evidence with the country’s largest employer: Walmart, with 1.5 million Americans employed.

Even has worked with Walmart since 2017, and started as an employee benefit targeted toward hourly workers who — it was thought — would benefit the most from having early access to earned wages. Today, Schlossberg told PYMNTS, more than 400,000 Walmart associates use the Even app, nearly triple what the company had initially expected. Surprisingly, he said, salaried employees are among its heaviest users.

The savings feature has already been made available to Walmart workers, with some 81,000 employees currently enrolled. A total of $21 million has already been saved by Walmart employees in their Even savings accounts. The average worker, Even reported, deposits $167 into their savings account after only three months, and these workers are often first-time savers.

Even users can keep utilizing the service when they change jobs, assuming the new employer is also part of — what Schlossberg wants to turn into — the larger Even ecosystem, with even more tools to help employees manage their personal cash flow in a more proactive and productive fashion.

Regulatory Thickets

As helpful as Even is in giving workers the tools that enable them to get in front of the inevitable financial potholes, Schlossberg admitted that it isn’t always a “slam dunk” conversation with employers. Even’s services — including the new services the company wants to offer in the future — touch upon various areas of state and federal financial regulations.

“One of the last sticking points is their regulatory concerns,” Schlossberg told Webster. “It’s understandable because [this type of service] is a new thing.”

The way to deal with that challenge, according to Schlossberg, is to anchor everything — including Even’s sales pitch — around the concept of transparency. It also doesn’t hurt that Even, not the employer partner, is basically responsible for the actions across its platform.

“You handle it by being very proactive, and saying what we know and what we don’t know,” he said. “We are very transparent with all of our data, and we explain why we are doing things.”

The evolution of a company like Even will say much, not only about the future path of innovation and disruption in mobile financial services, but the evolution of work, wages and financial planning for the U.S. workforce at large. Schlossberg seems to understand this, and promised that more offerings are to come as Even keeps growing and constructing its own ecosystem — all in an effort to turn the notion of a paycheck-to-paycheck economy into a positive force for change.

“There a lot of problems we still don’t help people with today,” he said. “But this is a … good start.”

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