Credit unions are to be lauded for their financial education efforts. As demonstrated by credit unions' activities during April, National Financial Literacy Month, they have jumped in with both feet.
Credit unions are known for their member service and providing the membership with useful financial literacy tools is an excellent way to make members stand up and take notice of it. Certainly credit unions offer this valuable service to help their members, but it's also self-serving: more financially savvy members are better members. They borrow wisely and pay their debts; they save; and they will make a broader use of their credit unions' other services.
It also creates brand loyalty that is invaluable. Financial education seminars and one-on-one assistance will aid credit unions in their pursuit of Gen Y members. One thing I repeatedly hear about Gen Y is that they want to do their own research when it comes to financial matters, such as buying their first car, but then they want to be guided in what to do with the information they have gathered.
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Credit unions have also led the charge in financial literacy innovations. The National Credit Union Foundation teamed up with Junior Achievement to produce an entire PBS series, BizKid$. Credit unions have embraced brass|MEDIA, a magazine targeting adolescents seeking financial guidance, and its young entrepreneurial founder Bryan Sims. Credit unions are regularly featured in the pages of Credit Union Times for opening in-school branches or providing financial literacy classes to members and nonmembers of all ages.
I've also heard complaints from credit unions that they sometimes have difficulty offering their services in the local schools because the curricula are already so jam-packed. I can't believe that teachers can't find 30 minutes a day for a month or even 30 minutes a week for a semester to allow for financial literacy training. Keep being persistent, and they will have to see the wisdom of making time for something so crucial.
NCUA has even gotten into the action by serving on Treasury's Financial Literacy and Education Council and offering up Community Development Revolving Loan Fund grants for low-income designated credit unions looking to offer or expand their financial literacy efforts. Their members, who are often the targets of payday lenders and check cashers, are the ones who can least afford to be financially illiterate.
Credit unions are offering financial literacy as a way of doing business, and more should find the resources to join the bandwagon. It's even a good passive cross-selling opportunity. If you're discussing retirement savings or getting the right mortgage, it's a natural for members to ask about your offerings. The crucial point is for the credit union representative not to bring it up themselves and negate the legitimacy of the entire literacy program.
Nothing could be better politically than to be able to tell members of Congress that all credit unions offer some form of financial education, whether it be simple brochures or monthly home buying seminars or offering courses of the proper handling of credit cards on college campuses. If you're performing this type of service to help their voting constituents–and they know about it because you make them aware of that–they will remember it.
To be sure, your members and potential members need it considering the nation's depressed savings rate and skyrocketing debt. That's not even taking into consideration the complexity of the modern financial services smorgasbord and rising costs of essentials such as housing and health care and near-essentials like college tuition. I won't even get into gas and food prices.
The problem isn't only what is new to the market but what has disappeared in other places. For example, defined-benefit plans where employees received a portion of their salary for life have been replaced with 401ks and IRAs, Roth or not, among other things. The burden of paying for the future has been placed upon workers' income rather than coming from employers' largesse. Unless significant reforms are made, Social Security may not be there for my generation and others to follow.
Not that your members are blameless for their financial situations. As CUVA CEO Laura Enock points out on page 16, credit union members who find themselves in a financial pickle often need to really sit down and think about why they got there. Are they dining out at Ruth's Chris on a Pizza Hut budget? Impressing upon them the importance of taking their responsibilities seriously is for their own good and yours.
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