Credit unions role in resolutions should focus on financial wellness and rewarding members smart habits

I’m willing to bet that most of you did not know that January gets its name from Janus, the double-faced Roman god who looks backwards into the old year and forwards towards the new. Janus was the patron and protector of arches, gates, doors, doorways, endings and beginnings. It is estimated that the custom of making “New Years resolutions” began in 62 BC in Rome, when such resolutions had a moral flavor, mostly made with the intention that we should all be be good to others. For those of you that know anything of Roman history, the Romans were notorious for breaking resolutions.

Fast forward to modern times. We’re still breaking resolutions, as it’s well known that New Year’s resolutions don’t have a high success rate. While most people opt out of the annual goal-setting event, about 40 to 45 percent of American adults set at least one resolution come New Year’s. For those of us that set resolutions, on January 1, we start off determined to achieve our goals. We’re excited and energized and think that the New Year will be different from the last, when our resolutions went by the wayside. But come February, the majority of us have simply abandoned our goals altogether.

Timothy Pychyl, a professor of psychology at Carleton University in Canada feels that resolutions are a form of “cultural procrastination,” an effort to reinvent oneself. “People make resolutions as a way of motivating themselves,” he says. “People aren’t ready to change their habits, particularly bad habits, and that accounts for the high failure rate”.

Credit Unions can play a role in making resolutions work by focusing on changing behaviors throughout the year.  Remember, you keep telling members that you’re a financial advocate, right? According to the Fidelity 2014 New Year Financial Resolutions Study (yes, there really is such a study), Americans are taking more control of their finances and are making money-related resolutions this year than in any of the past five years. The study states that 54 percent of Americans said they “typically consider resolutions concerning their finances” up from 2009 when just 35 percent said they would make financial resolutions. And remember, consumers also have become more conservative in their spending and savings habits.

If you’re going to be a financial advocate, think beyond your annual New Year’s Resolution marketing. Throughout the year your efforts should focus on improving members financial wellness and helping member households create smart financial habits. Here are just some of the ways you can do that:

Help Members Take Financial Inventory and Manage Expenses.

Your credit union needs to have a means to help every member household monitor and track expenses they have and how they spend their money. Experts agree financial wellness is not possible without a budget. The key to successful household budgeting is realistic numbers and accurate information. Money management is an important chore, so help help members with this chore by reducing friction and providing online financial tools and management beyond fundamental online banking and bill pay.

Provide Tools and Suggestions That Help Members Live Below Their Means.

Just because you can afford a Mercedes, does not mean that’s the vehicle is right for you. Tools that show the impact that Mercedes has on a members retirement plans are readily available. Being an advocate means providing people with guidance and empowerment to make the right choice. Make 2014 the year you engage members with ways to get the biggest bang for their buck.

Insist That Members Have An “Emergency Fund”.

Every American household should accumulate six months of take-home pay in case the principal breadwinner suffers job loss or has a medical emergency. Sure you offer Savings Accounts, Money Markets Accounts and Share Draft Accounts. But do you market or offer an “Emergency Fund”? Even if member households can only deposit a small amount per month, you will be giving them peace of mind and members will enjoy watching the emergency fund grows with the added benefit of improvement financial confidence. You can be the enabler of this.

Help Members Fund Retirement.

I don’t believe credit unions talk with their members about retirement needs and goals as much as they should. You should be sitting down with members and helping them set up systematic monthly retirement deposits, assuring some income is allocated to retirement needs. You can’t start this too soon and it can easily be part of your credit unions retention strategy. Obviously if you have an investment CUSO, this approach can be particularly beneficial.

Help Members Consolidate and Manage Card Debt.

Most credit unions do a fairly good job of promoting balance transfers. But the opportunity is much larger and member households need and want more credit card spending and debt control. 46% of Americans have credit card debt and for many, it is simply unavoidable. Offer clear scenarios showing how consolidating credit card debt reduces overall debt expense and can quickly improve household net worth.

It’s ironic how every New Year’s we all publish great financial advice after months of marketers and retailers encouraging people to spend what they do not have. Credit unions can benefit in helping Americans focus on financial wellness yearound.