April is Financial Literacy Month and opportunities abound for credit unions.
For the past seven years America’s Credit Union Museum has been helping credit unions facilitate conversations about money among young consumers and between teens and their parents through its CU 4 Reality Financial Education program.
The program helps credit unions provide a financial literacy curriculum to the schools in their community. The classroom package includes a ready-to-teach plan that can be utilized for one year or condensed to one week. It culminates in the CU 4 Reality Fair, which gives students a chance to get some hands-on experience in spending and budgeting. Given a career, a realistic starting salary and a monthly net income, students are challenged to cover basics such as housing, utilities, transportation, clothing and food while factoring in additional expenditures such as entertainment and travel. Throughout the fair, there are many temptations for additional spending, and students must learn to balance their wants and needs to live on their own. After the students have visited the various booths covering components of independent living, students balance their budget, and then sit down with a financial counselor for review. Those who end up in debt or haven't made good choices are sent back to the beginning with tips on where they went wrong.
“Beyond the obvious altruistic nature of the program, hosting the reality fairs is a business development opportunity for credit unions and helps build relationships with the schools, local businesses that participate as vendors and parents,” said Peggy Powell, executive director of the Manchester, N.H.-based museum. “Many credit unions that sponsor the fairs invite their legislators to participate so it’s been a way to really build awareness of credit unions and making consumers and legislators alike understand that credit unions are not just a great alternative to banks but they are the smarter choice.”
According to Lori Holmes, marketing manager at Service Credit Union, and Karen Benedetti, vice president of marketing at Service CU, who both serve on the museum’s marketing committee, the benefits of the program can even be extended to those serving in the military and their families.
“We spoke with Arty Arteaga, president/CEO of the Defense Credit Union Council, about the need for ongoing financial readiness courses,” said Benedetti. “So many young people go into the military without the necessary financial management skills and many either spend all their hazard pay or are unprepared to handle the financial realities of a civilian life once they’ve served their time because so many of their necessities like housing were taken care of for them. Imagine what a difference reality fairs could make in the lives of those risking their lives for our country.”
Currently the CU 4 Reality program is being used in nine states and Germany, and a total of 14,385 students have benefited from it.
Holmes added that given the growing need, credit unions can help fill that financial education gap for all consumers.
Oklahoma is one of a handful of states that has made personal financial literacy a requirement for high school graduation. As part of the state’s Passport to Financial Literacy, students in grades 7 through 12 must meet 14 standards set by the state education department. These include earning income, understanding state and federal taxes, banking and financial services, balancing a checkbook, savings and investing, planning for retirement, understanding loans and borrowing money (including predatory lending and payday loans), understanding loan interest and credit card debt, identifying fraud and theft, rights and responsibilities of renting or buying a home, understanding insurance, understanding the financial impact and consequences of gambling, bankruptcy, and charitable giving.
“The biggest challenge is that this is an unfunded mandate, so no funds have been provided or set aside to make it happen,” said Kristi Brooks, vice president of marketing at Tulsa Teachers Credit Union.
Enter FoolProof Financial Education Systems. As part of its partnership with the over $988 million credit union, FoolProof has modified its online, interactive high school program to meet 100% of Oklahoma's requirements for financial literacy for a student to graduate. In addition, it is providing certified transcripts that a student can travel with to any school. And any school administrator in the state will be able to go online and look at or verify the financial literacy subjects that student has passed.
“We're using this as a national pilot,” said Remar Sutton, chairman of FoolProof. “Since more and more states are going to financial literacy requirements, credit unions have a huge opportunity to provide cash-starved school systems a turnkey way to keep up with a student's financial literacy progress.”
Brooks added the credit union has been working closely with the superintendent of schools and the Oklahoma Council on Economic Education and the enthusiasm about the program has been palpable.
“It is just such a simple solution to a complex initiative that the state has taken on,” said Brooks. “We already serve some 250 school districts but our contract with FoolProof allows us to make the program available to any district that wants it on the eastern side of the state of Oklahoma. Everyone is so excited and what’s great is that with budgets being so tight that some districts have to shutter the doors of some schools, credit unions get to be the hero and provide some much-needed relief.”
Since the courses are Web-based and include tests to ensure students understand each module before moving ahead, there is no extra work for teachers.
“You should see how engrossed the kids are as they are learning,” said Will deHoo, founder of FoolProof. “We add a peer-to-peer element and teach in an engaging way that makes financial literacy fun and we go beyond the technical basics to help students think in terms of being a smart consumer. That’s why it works in schools.”
FoolProof recently added a “Burning Money” series, which focuses on helping develop the critical thinking skills necessary to become an intelligent spender and saver. Consumers can work through the 45-minute video sessions at their own pace.
“What good does it do to teach budgeting and savings skills if young people don’t know how to spend money wisely, period,” said deHoo. “Some of those young people are living at home because of the tough job market. But here’s the actual reality: if you’re burning money thoughtlessly, you are always limiting your choices in life–including where you live.”