How credit unions can help members build financial resilience

Financial inclusion matters, but financial resilience matters even more. We hear the testimonials over and over again about credit unions changing lives, and the People Helping People credit union philosophy. Especially for many smaller credit unions, delivering financial resilience tools and support can truly be the “make or break” element in their members’ long-term financial trajectory, since these credit unions are often in situations serving the previously unbanked or underbanked. Today more than ever, credit unions must deliver the essential financial resilience programs either directly or through provider partnerships. Financial resilience is key to the success of our members, and member success drives our own future success and sustainability as viable financial institutions. Below are some of the ways to keep important financial resilience goals continuously in front of your members:

Focus area 1: Be proactive about offering financial coaching services

Providing access to free financial coaching is truly a competitive advantage for credit unions, whether you deliver these services directly or through a third-party provider. The opportunity to meet 1-on-1 with a financial coach in-person or virtually is the best way to begin the financial resilience journey and positively shift the financial trajectory for your members.

Focus area 2: Accumulating savings is the most important step in creating financial resilience

Small incentives, round-up programs and prize-linked savings encourage members to build a cash reserve. Too often, families are living paycheck to paycheck without any type of savings in place. Most Americans do not have enough savings to weather even an $800 emergency expenditure. This is how consumers often fall prey to the payday lenders. Ideally, a 3-month to 6-month cash reserve should be in place.

Focus area 3: Use content marketing on social media to promote healthy use of credit

Credit unions can often consolidate consumer debt and counsel members on avoiding high-spending on credit cards. There is a good use of credit, and there is a bad use of credit. Members have to learn the difference between needs and wants, and create a disciplined approach to spending. This type of social media content marketing, along with community outreach events and word-of-mouth testimonials, will also convert nonmembers into members.

Focus area 4: Modify loans when members are in financial distress

Skip-a-payment options and loan modifications can assist members that are facing emergency situations such as a healthcare crisis or job loss. However, members may also require nonprofit referrals and supplemental income supports to successfully emerge from a crisis.

Focus area 5: Offer educational webinars on retirement planning and insurance coverage

The message to your members is that the best time to get started is right now – a younger age is better to start long-term financial planning and creating a “future vs. today” orientation. Members that start 10 years earlier can “double their future” if they start at age 35 versus 45, for example.

Preparing for the potential economic fallout

Economists predict that the U.S. economy may fall into recession during the second quarter of 2024 as consumers cut spending and high borrowing costs continue to slow business investment. We will see more members facing job loss, and the ongoing financial stress of prices rising faster than wages.

This is the time for financial preparedness – increasing financial resilience.