Financial Education Is Not the Solution: Guest Opinion
Financial Education is the magic bullet! Credit unions need to offer more financial education!
As a financial educator, I hear it all the time. But I don’t agree. Financial education is NOT the solution. Sure, it's part of the solution, but it's really just the start. Credit unions need to move beyond education and help members change their behavior.
A wise person once said, “What good is a world-class brain surgeon if they lie out on the beach all day?” The surgeon has knowledge and experience but does nothing with it. That isn’t power – putting that knowledge into action is power.
Look at health and fitness. We know we should work out and eat better. But a daily routine of going home after work, lying on the couch, watching TV, and eating a pint of Ben & Jerry's is hard to break. No amount of information is going to change that. So why do we think it's going to be any different for personal finance?
Despite educating more than 1.2 million students over the past three years (according to the latest annual report from the National Youth Involvement Board), tests show no improvement in youth financial literacy. Young adults are going into record levels of debt to finance education and make ends meet. They’re using high-risk lending products such as payday lenders and pawn shops. Why do we celebrate the number of presentations and not the impact?
One of my favorite resources for changing behavior is the book “Switch: How to Change when Change is Hard” by Chip and Dan Heath. The book talks about the rider, the elephant and the path. The rider, our rational side, likes data and facts. The elephant, our emotional side, needs to feel something with regards to change. The path is the environment in which we live and work. When all three are on board/aligned, it's easier to make change stick. Through presentations and workshops, we can talk about statistics and facts and information to appeal to the rider/rational side. But how can we appeal to the elephant?
We need members to think about the emotions they will feel after making a change and reaching their goal. I ask people to write out or draw how they will feel when they are debt free or when they have enough money to retire. Then I ask them to write down one-step action items to do that day, week and month to get closer to their goal.
Environment is just as important to changing behaviors. How are your branches and products designed? When members use your online banking, are they encouraged to make smart choices? Do you offer PFM tools and encourage members to use them? Do you offer financial counseling? Even better, do your financial counselors understand behavior change, habits and motivational theories and know how to implement them?
I challenge you to help members change their behaviors. We can educate our members until our face turns blue, but until we help them take action, we will have failed them. Let's start focusing on impact and start making a difference.
Kelsey Balcaitis, CUDE, is youth financial education coordinator at A+ Federal Credit Union in Austin, Texas. She can be reached at (512) 421-2880 or email@example.com.