The Sawa Reader
The tl;dr highlights of Sawa 2022
I’m really proud of what we’re building at Sawa — a first-of-its-kind community financial support platform. Sawa is a way to improve your financial stability and protect against your own financial emergencies while helping others in your community address unexpected financial challenges. At Sawa, you’re not alone.
We’re building something novel, and we’re transparently sharing our thinking and research along the way. For us, these are problems and solutions that, once seen, can’t be unseen. I’d love to share our thoughts, pose a few questions to help imagine what’s possible, and ask you to share your take. My inbox is always open.
The bottom 50% owns just 2% of the wealth
I first encountered this data in Thomas Piketty’s A Brief History of Equality, his slimmer ~275-page summary of his own ~700-page book. We certainly agree on the problem, though Sawa proposes a novel solution: enhancing access to credit and reducing financial fragility for the underserved so people can get into and stay in their homes.
What if instead of encouraging families to build a six or eight month emergency fund on their own — a task so audacious it’s Sisyphean — Sawa’s community pot could serve as everyone’s well-stocked emergency fund?
Read more in Feels like financial fragility
The key to creating lasting financial wealth is community
My sense of community springs from my childhood: I grew up in southern Mississippi. Most of the people in my community didn’t have access to the economic rails that many people take for granted: a checking account, the ability to walk into a bank and get a loan. They would have been denied. How then, was our 100-member church able to finance a renovation complete with a state-of-the-art organ and audio system, plush carpet, new bathrooms, and air conditioning?
What if we considered the capacity of the community when measuring creditworthiness? Might a modest amount of risk sharing help us remedy the persistent yet mitigable problem of payment ability poorly assessed?
Read more in The Link Between Lasting Financial Health and Community
The credit scoring system deserves an update
45 million Americans are credit invisible. That is, they have no score — either because they’ve never taken on debt, haven’t done so recently, or don’t have enough payment history for the algorithm to deliver them a numerical score. Fundamentally, this excludes them from the financial system. They can’t open a credit card, take on a loan, or get a mortgage. At Sawa, we believe a credit scoring system that excludes 45 million Americans is one that’s due for an update.
What if we used community as another data point to bring millions more people into the credit system?
Read more in 3 Ways to Improve How We Calculate Credit Scores
We are not as divided as we feel
Lately, Americans feel divided. Yet, we have more in common than we realize. The human brain struggles to think statistically. It takes shortcuts, called cognitive biases, that while useful in the short term, do us a disservice in the long term. At Sawa, we’re obsessed with behavioral science. We believe that research can help us to overcome cognitive biases, and use it to drive our product decisions.
What if we built a community technology platform where people felt united around a common goal, using what we know of these cognitive biases to tilt the scales toward unity and financial health for the entire community?
Read more in Cognitive Biases Are Splitting America
Good information crowds out bad information
Higher education institutions are happy to perpetuate the idea that they are purely selection committees dedicated to enrolling the best student body possible and that any amount of tuition is “worth it.” In reality, the admission and aid policies are the ultimate black box to the majority of Americans — a complex system that’s one part merit-based, one part need-based, and one part marketing and sales. The ugly reality is that you’ll get a better deal on your tuition if you have money to pay for college than if you don’t. When I was enrolling in college, no one I knew talked about this; it was a different story for many of my future classmates.
What if it were easier and more comfortable to talk about financial issues, share good financial information, and to help each other out when we need it?
Read more in How the wealthy get discounted college tuition
We’re better together
Five thousand years ago, Chinese merchants were transporting their goods by boat on the rushing river — a faster, yet riskier method than by land. Some boats survived, some were lost to the rapids. Did they decide that it was too risky to take the water? Nope, simply that it was too great a risk to bear alone. They pooled their risk by distributing their goods among each others’ boats, inventing insurance. Our most common experience of insurance — copays, premiums, labyrinthian claims processes — is certainly less than inspiring. Yet, the underlying mechanism of insurance is elegant and powerful: the group is a better safeguard against loss than an individual standing alone.
What if no one had to bear financial shocks alone — replacing feelings of individual financial fragility with the security of community prosperity?
Read more in We’re Better Together
Subscribe and share
To never miss an update, subscribe to the SAWA SAWA newsletter on Substack or LinkedIn and share it with your network.