Thinking beyond financial literacy

Financial education is one of our basic industry principles. At the core of who we are as an industry, we care about providing quality education and training. Nationally, a belief in the power of education is also fundamental to how many people operate. We debate about the cost of college tuition and the best ways to make education more accessible. We tell younger people phrases like: “stay in school” or “make sure you get a good education so you can get ahead.”  This is good advice, but fails to address the reality that education falls short when many Americans struggle from paycheck to paycheck. A recent New York Times article questioned the affordability of the American lifestyle, suggesting that most Americans either finance their lifestyles through debt, or have sources of wealth other than jobs to draw from. Wealthy consumers are more likely than middle class consumers to put away additional discretionary income toward insurances and education: those things that will provide for a more secure future.  This is done because there is real value in education.

Education plays a critical role in our lives. It does enable us to get ahead. It provides us with skills to do better with our selves – whether that be in technical knowledge toward a specific career path, a life skill that saves our health and money such as cooking, or a college degree that will open doors that wouldn’t be open otherwise. Financial education is similarly extremely important. Most people are underprepared when it comes to understanding debt management, leveraging, credit building, and budgeting. However, as credit unions, we should understand financial education in its proper context. A college degree without a job becomes a problem, especially when the job seeker is earnestly looking and has growing debt they are unlikely to affordably repay. Likewise, financial education falls short when real wages are not keeping up with rising costs of living. In fact, financial education alone can sound tone deaf in communities that struggle with true inequities or other barriers to financial stability. (Read “Scarcity: The New Science of Having Less and How it Defines our Lives” for a good overview on how the financially challenged are actually making logical decisions that line up with their lived reality.) Financial education is the foundation, but as credit unions we need to build upon education. Financing is part of our country’s economic system, and it is an important tool toward wealth building.  As credit unions, we have tools and resources in our product and service suites to think beyond only providing financial education – we can create mutually beneficial relationships with our communities. Let’s challenge ourselves to continue to remain relevant, and even innovative, in demonstrating that we truly understand the economic lives of our members.