Since school systems do not and have not provided financial education as part of their curricula for several years, many Americans are growing up financially ill equipped and that’s having a huge impact on mental health.
The burden falls to their parents, who themselves are not necessarily all that money savvy, because financial education wasn’t taught during their time in school either. At the same time, finances have become so much more complex, between the shift of tried and true concepts like defined benefits plans to 401Ks to the more modern ones like buy-now-pay-later offerings. Meanwhile, student loans are weighing heavier and heavier on young adults, who may put off starting a family because they simply cannot afford it.
That financial pressure can lead to a lot of feelings. In fact, a study from May by Bankrate.com found that money is the most frequently cited factor negatively impacting mental health at 52% of U.S. adults – ahead of their own health situation, current events, the health of friends and family, relationships and work. And financial anxiety is only rising. A lot of people, including your members, have a lot of feelings around money a lot of the time.
So, how well are you and your team equipped to help members? After all, credit unions are the perfect conduit to help break these generational cycles for our members.
Like so many values we carry on from generation to generation, our attitude toward money is a big one with long-lasting impact. Offering financial guidance from a young age can help kids, teens, and young adults learn the facts that help form new attitudes toward spending, saving and wealth building.
Children begin forming their values around financial habits and norms, as well as the cognitive ability to plan ahead and understand decision-making as early as pre-school, according to the CFPB. Knowing that, providing an informative experience that is also engaging is critical. Make it a game for them. Feature bold graphics and simple to understand words and concepts that are age-appropriate for their financial education.
As they mature, so too must the information provided. Consider what’s happening in the lives of early teens:
- First jobs mowing lawns or babysitting
- Being able to buy the trendy outfit they’ve got in mind
- Saving for their first car
What information can your credit union provide that would be useful for them? How can your credit union repackage some of your offerings for the pre-teens and teens among your members? Answering these questions is critical for your offerings and young members’ futures, because teens who go to school in areas with state-mandated financial education were found to use lower-cost college financing options and were less likely to carry a credit card balance, per Montana State University research.
Additionally, youth financial education services are the gift that keeps on giving. Your young members will share what they learn with their parents, or even talk through some of the educational information with them. And that’s important, because parents’ stress – most of which is driven by money – affects their parenting as well as potentially their financial footing. Studies have shown that excessive anxiety and stress can lead to both physical and mental health issues, affecting members’ ability to show up for work to earn the money to pay their debts back – some of which are likely to your credit union.
So, offering financial counseling for adults is important, too. Offering financial education materials and classes proactively helps members to keep on the right track or get back on track. For example, getting a mortgage is stressful enough, and then working hard to make your payments only to have the hot water heater break or discover an electrical issue that requires immediate attention is not only disheartening as a new homeowner, but also it can be enough to create at least temporary financial instability. But when your credit union offers courses on the true cost of homeownership, a member can be better prepared to either save in advance for an emergency fund or perhaps buy a more affordable home.
Conversely, mental health issues impact financial decisions. A study in England found that 72% of respondents with mental health problems said it made their financial situation worse. While 25% of people with mental health issues are in “problem debt,” just 8% without mental health problems reach that level of debt.
Again, even though your team members are not trained in psychology, it is important a factor to be aware of to be able to serve members more holistically and with empathy. It doesn’t come naturally to everyone, or they don’t feel they know the right things to say. Sometimes it’s just listening, and then working with them to creatively find the path to meaningful financial wellness.
People have a lot of feelings around money that can make it hard to think rationally about it. They’re stressed their car payment will be late – again, or they’re sad and scared because they lost their job. However, by teaching members early and often, your credit union can help break the cycle of poor financial decision-making passed down from older generations and start healthier, less mentally taxing financial habits for future generations to come.