BlackRock Managing Director weighs in on how to save money during a financial crisis

Deborah Winshel, Global Head of Social Impact at BlackRock joins Yahoo Finance’s On The Move to discuss emergency savings tips amid the COVID-19 pandemic.

Video Transcript

- For a lot of folks right now, it is difficult to imagine saving up for retirement. They might have lost their jobs or had pay cuts at the moment. We're talking about that in this week's Funding Our Future. We're joined by Deborah Winshel. She is BlackRock managing director and global head of social impact.

BlackRock, by the way, is a partner of the Funding Our Future campaign. That's a group that we feature each week only on Yahoo Finance that advocates for a secure retirement for all Americans. Deborah it's good to see you. You're joining us from New York State. I want to ask you about what are called emergency savings initiatives. That's what you guys are focusing on.

And we know a lot of people, they're stretched right now, so they're not thinking in terms of putting away money for retirement. How do you reframe that perspective so that they can maybe put a little bit away?

DEBORAH WINSHEL: Well, first of all, thanks for having me. It's a pleasure to be here. So it's interesting. Particularly coming from the perspective, as you mentioned, of long-term savings for BlackRock, it's critical that everyone has the opportunity to build long-term savings really in preparation for retirement. And the work that I do at BlackRock is very connected to retirement, but I manage our social impact group.

And we think a lot about, what are people thinking about and what are they able to do who can't necessarily be thinking about retirement, who aren't necessarily BlackRock clients? And to no surprise, from everything we've been hearing, particularly during this pandemic, for so many Americans, just finding $400 for an emergency or finding themselves living paycheck to paycheck is not uncommon-- and of course exacerbated by this situation.

So we felt that, while certainly, one component of this is thinking about long-term savings, we felt that there aren't a lot of easy, compelling ways for people to save. It's difficult enough, but if savings is expensive. If it's not easy for you to do, as I think so many Americans face, what could we do to at least create a better opportunity for people to, when they have a little extra money, easily put it aside? And that was really the beginning of this initiative.

- OK. So let's assume you have a little extra money. That's great. What do you do? What are you telling people? Because a lot of people-- they may not have lost their jobs, but they're taking pay cuts.

DEBORAH WINSHEL: Yeah. People are taking pay cuts. People are losing their job. People are finding that they have extra expenses, even though some people may have fewer expenses. And from our point of view, any opportunity that you have to save, even if it's just for a short period of time, is something that will provide a foundation and some cushion for you as you encounter different impediments.

So it's very interesting. Even within the current situation that people are finding themselves, we're seeing that there's an increased interest in savings. So for example, one of our partners-- one of our fintech partners called Capital has created a an interface that allows you to save with specific goals. They've seen a 500% increase in people's interest in short-term savings.

So people may just be saving for even a very short-term-- one or two weeks-- just so that they're able to better manage their expenses. But having an inexpensive easy way to do that is surprisingly inaccessible for a lot of people.

- Deborah, is there anything from a policy perspective that can also be done to make these kinds of saving plans easier for people?

DEBORAH WINSHEL: Yeah, absolutely. So there's a number of things that generally people can do, including government. First of all, there's such an obvious movement to online and mobile, so we think financial institutions can just make it more accessible. We think employers can find other ways to really focus on employee financial health-- make savings part of what they offer employees.

Record keepers can build it into their infrastructure. And for government-- and there are a number of initiatives going on right now-- even something as easy as letting people opt out-- so one of the reasons that retirement savings has been so catalytic is that people automatically get enrolled in a 401(k). You have to decide not to.

And if there was a similar provision for savings so that people automatically just put savings away, even if it was just a small amount each week, and you opted out of that, we know, from a behavioral point of view, more people will save. So very simple things-- savings is not-- it's not easy. And particularly in this environment, it's not hard, but I think there are a number of things that institutions can do to make it more available, and accessible, and compelling for people who are trying so hard to make ends meet-- particularly during this period.

- Deborah, thanks so much. Deborah Winshel is BlackRock managing director and global head of social impact. Appreciate it, Deborah. Thanks so much.

DEBORAH WINSHEL: Thanks for having me.