Rediscovering the value in financial education programs

Spread out across the United States, credit unions dedicated to the cooperative movement continue to offer the important products and services necessary to help their valued member-owners improve their financial lives.

What separates others, however, are the cooperatives that go beyond the products and services to solve a member need while building a solid foundation of financial education, literacy, and inclusion that will serve participants’ best financial interests. These programs are created to serve those participants during both successful times and in times of financial uncertainty.

Such community-first thinking is why Astera Credit Union’s President and CEO Martin Carter enacted the EmpowerMe! financial wellness program for members in and around their Lansing, Michigan, branch locations. More than that, EmpowerMe! cultivated a baseline of financial awareness in the minds of participants that with improvement in financial education, literacy, and inclusion, the better opportunities they would have in qualifying for more of Astera’s in-depth products and services in the future.

It’s important, though, to hear Carter describe where his cooperative started versus where the program would lead them and their member participants. Per the financial wellness program’s feature in a recent CUNA News piece, Carter recognized the program’s value and long-term benefits for improving members’ financial lives.

“We were turning down one out of every two loan applicants, and we were turning down almost the same number of checking account applications,” Carter told CUNA News. “We realized we were dealing with a lot of people from low-income households who were struggling with their credit scores and with making good financial decisions because they lacked knowledge and financial literacy.”

By participating in EmpowerMe!, members receive one-on-one counseling with credit union staff certified in the CUNA Financial Counseling Certification Program. Their objectives center on boosting members’ credit scores by a minimum of 100 points while solidifying consistent savings habits.

But it doesn’t stop there. Carter’s goals for participants goes even further. “We also want them to have a small dollar line of credit or a credit card they can fall back on. And if they were relying on payday loans, we want them to be out of that cycle by the time they leave the program.”

More than just individual financial well-being

Why is financial education important for credit union members and non-members alike? According to the non-partisan think tank Milken Institute that studies financial literacy in the United States:

  • 75 percent of teens lack confidence in their knowledge of personal finance
  • 41 percent of teens don’t know what a 401k is
  • 32 percent of teens don’t know the difference between a credit card and a debit card.

Wondering about findings related to U.S. adults and financial literacy? According to Consolidated Credit:

  • Only 63 percent of U.S. adults believe financial education should be taught in schools
  • Just 41 percent said they had to teach themselves about personal finance
  • A full 33 percent believe their financial knowledge (or lack thereof) holds them back financially

With credit union solutions like Astera’s EmpowerMe! initiative in mind, we list below various ways financial education and literacy programs can turn the fortunes of everyday American households around for future generations.

Watch financial behaviors change with financial education programs

According to the National Financial Educators Council (NFEC), real financial literacy entails not simply awareness and understanding of personal finance through testing, but the capacity to apply those lessons learned to one’s real life financial situations and daily, weekly, or annual habits. Success in financial education, when taught correctly, is the ability to give shape to one’s financial behaviors to fit with the individual’s short- and long-term financial goals and objectives.

The International Organization of Securities Commission recommends initiatives and programs tailor their educational content around real-life events, financial situations, or challenges the consumer may experience or encounter in the future. Additionally, true difference-making programs craft educational content that meets the actual needs of target audiences or communities who need that specific, practical info such as women, minorities, or low-income communities.

Member buy-in

While financial education programs benefit all involved, they can outright change the lives of members. An organization’s growth largely hinges on the credit union to successfully engage and interact positively with both existing and prospective members. When you do that, there’s a better chance they will learn to value the products and services you provide. Your relationships with them will strengthen, and most importantly, they will want to continue being a member over the long-term.

When you successfully capture a member’s attention through, say, a helpful financial education program, you create opportunities to drive further membership to your cooperative.

Future investment opportunities

In research testing reported by the NFEC, researchers asked participants two sets of questions, one set of basic financial literacy questions, and one concerning advanced financial awareness. In summary, the report states “The probability of participating in the stock market increased 14 percentage points with a one standard deviation increase in advanced financial knowledge. Also, a one standard deviation increase in basic financial literacy increases the probability of saving for retirement by 20 percentage points.”

In fact, according to the National Bureau of Economic Research, low-income workers attending an employer-financed financial education program were 11.5 percent more likely to take part in a 401k investment plan and saving more for their retirement than their coworkers who chose not to attend.

Once again, financial education and wellness programs can be used to assist your credit union by addressing member need and the targeted objectives of participants by simply offering access and information to the best sources – and yes, that includes products and services like digital small-dollar lending or small business loans.

As youth goes, so goes U.S.’s future financial wellness

Financial literacy and education taught to our children can only benefit their futures and the country as a whole. How many times have we heard uplifting stories about students in minority communities with parents who sacrificed the rest of their lives to see their children realize a better education than they had, or become the first in their family’s history to graduate college? These stories changed their family’s history forever.

What if the credit union movement made those opportunities a little less daunting? In a survey by the Organization For Economic Cooperation and Development (OECD), well over a quarter of respondents claimed their culture influenced their outlook on wealth. Related, only 23 percent of kids surveyed claimed they talk to their parents frequently about money.

Credit union financial education programs like EmpowerMe! represent a foundational and inspirational way to invite community members into your cooperative. They create trust through the spirit of financial wellness, gives them a reason to make your credit union their new home, and encourages financial confidence and knowledge that will help them thrive for the rest of their lives.


Contact the author: QCash Financial CUSO

Contact the author: QCash Financial CUSO

Seth Brickman

Seth Brickman

Seth is an innovative leader with a successful track record of building software products customers love to use. As a veteran of the US Navy and MBA Adjunct Professor, he ... Web: Details