Innovative approach to savings benefits members and local charities

According to recent reports, nearly half of people in the United States have $1,000 or less in their savings accounts, and 28% of Americans have no money saved for retirement. While alarming, it’s not surprising when you look at inflation, high housing costs, and the financial literacy crisis. In recent years, financial literacy has become a critical topic, impacting the financial well-being of individuals and families. However, the numbers tell a concerning story.

Currently, only 57% of U.S. adults demonstrate financial literacy—a significant decline of nearly 20% compared to 10 years ago. This decline can be attributed, in part, to generational differences, with 59% of baby boomers considered to be financially literate, but only 36% when talking about Gen Z. According to Next Gen Personal Finance, a non-profit whose mission is to guarantee that by 2030 every U.S. high school student will graduate having taken a one-semester course in personal finance; currently, only 25 states require a personal finance course to graduate.

With this gap in financial literacy, financial institutions, particularly credit unions, are looking at innovative and creative ways to encourage their members to save for the future. From competitive savings rates and low checking account fees to workshops and personalized education programs, credit unions are recognizing the need to engage with their members to make saving a priority. A relatively new engagement approach being adopted by financial institutions is adding gamification, the strategy of adding game-like elements, to their products and service offerings. The goal is to make financial activities more interesting, enjoyable, and rewarding for members, motivating them to embrace responsible financial habits such as budgeting, controlling credit card debt, and saving for the future. And, in turn, it can improve customer retention and loyalty for the credit union.

Neighborhood Credit Union, a Texas, not-for-profit organization, offers its members a Prize Savings Account that rewards members for saving and makes a donation on their behalf to one of four local charities. With a minimum deposit of $25, members receive one entry into a monthly Prize Savings drawing for every $5 they save. Members are eligible for monthly cash prize drawings of $3,000, $2,000 and $1,000, culminating with the annual grand prize of $49,999.99. Several members who have been awarded the monthly cash prize drawings have already seen their savings almost double. The charities benefiting from this inventive program include:

• North Texas Food Bank – a non-profit hunger relief organization that distributes donated and purchased foods through a network of nearly 500 partner agencies and organizations
• The Family Place – an organization empowering survivors of family violence by providing safe housing, counseling, and skills that create independence while building community engagement and advocating for social change to stop family violence.
• Boot Campaign – an organization created to honor and restore the lives of Veterans and military families through individualized, life-improving programs.
• SPCA of Texas – an animal welfare agency in North Texas providing every animal exceptional care and a loving home.

Identifying innovative approaches to financial engagement is crucial in a landscape where financial literacy remains a pressing concern. By blending gamification with responsible financial habits, credit unions can empower members to take charge of their financial futures and have a little fun in the process. Creative solutions can have a significant impact, both on members and on the credit union itself, paving the way toward a financially secure future.