How To Help Gen Y Get Smart About Money

Financial literacy classes along with specially tailored products can attract the next generation of members who are critical to any credit union’s long-term survival.

 
 

Younger Americans are facing a troubling financial future because they are not saving money the way earlier generations did. According to a new study from the Urban Institute, people age 40 and younger have accrued less wealth than their parents did at the same age, and a recent article in The New York Times concludes that young people may not be entirely to blame. The article cites stagnant pay, soaring debt, and the housing market collapse as contributing to the younger generation’s minimal savings.

To encourage young people to save more, Generations Community Federal Credit Union ($2.17B, San Antonio, TX) offers a variety of financial education programs to teenagers and young adults.

“We want them learning how to invest their money early so they can save and budget properly and be financially fit by the time they graduate from school,” says Wendy Bryant-Beswick, vice president of marketing and business development at Generations Community Federal.

CU QUICK FACTS

  • Generations Community Federal Credit Union
  • HQ: San Antonio, TX
  • ASSETS: $2.17B
  • MEMBERS: 46,613
  • 12-MO SHARE GROWTH: 5.72%
  • 12-MO LOAN GROWTH: 10.70%
  • ROA: 0.33%

A financial education advocate working closely with Generations’ student brand manager leads the credit union’s programs at local colleges and at one local high school. Both positions are filled by young staff members who can relate better than older adults to high school and college students.

“Although many financial institutions offer similar education programs, they don’t always send instructors who relate well to the students,” Bryant-Beswick says. “Our team members go to a school or event and they fit into that millennial demographic. Because of their age, it’s very easy for them to teach classes and help students with budgeting, managing credit cards, financial scholarships, and everything they need to do from a personal finance perspective.”

With each school’s consent, Generations Community sends its financial education advocate on campus to teach classes throughout the day. Certain days of the week are dedicated to each campus. The credit union emails students who are existing members about the financial literacy classes, which are promoted primarily through traditional campus outlets such as bulletin boards and social media.

“It’s all about getting students out of those standard bad habits, because we aren’t finding these financial literacy courses in our high schools, other than the high schools we’re teaching in,” Bryant-Beswick says. “Financial education is not a core curriculum or a class that’s offered in our education system. If we’re not teaching it, there isn’t really anybody else dedicating that amount of time.”

The credit union teaches financial literacy to an average of 3,000 students a year and also offers an online literacy class that reaches 40,000 people.

More Than Education

Financial literacy is important, but many young adults also need programs tailored to their specific financial needs. To accompany its educational offerings, Generations Community has a youth checking account, convenient campus branches, and a new customized loan to help young people purchase their first vehicle.

The loan permits up to $25,000 for the purchase of a vehicle to borrowers ages 18 to 25. The loan does not require a cosigner, only proof of three months employment and clean credit. Generations Community charges 15.5% on the student auto loans.

“It is a fraction of what they would get if they had to go elsewhere for a loan,” Bryant-Beswick says. “The dealers charge significantly more than 15.5% and typically will always require a cosigner.”

The program has been popular among young people. Though it is less than a month old, the auto lending program has already received more than $1.5 million in applications, and that’s with no external advertising.

“It’s all been word of mouth,” Bryant-Beswick says. “We’ve really been using guerilla marketing techniques on this one. The whole premise of the program is to get youth bought into the fact that this is the way to establish your credit for the future.”

The Effect On The Bottom Line

Although not the most profitable venture, the youth financial program offers value by building strong ties with the community and, more importantly, with the next generation of members. Attracting that generation is critical to the future survival of credit unions because the average age of current members is growing older.

“We see everything we do as building a lifetime relationship,” Bryant-Beswick says. “We would like to establish a relationship with members while they’re young so we can help them become financially fit.”

The education outreach programs also have the added benefit of attracting the students’ teachers, professors, and parents to the credit union. Many of these potential members were unaware of the advantages the credit union offered until the students began banking with Generations Community.

“It’s definitely helped the credit union grow with a younger demographic,” Bryant-Beswick says. “That’s one of our strategic goals. We already see organic growth in auto loans and credit cards from students who become members. We feel like we are helping them establish credit,” an effort that also benefits the credit union.

 

 

 

 

April 22, 2013


Comments

 
 
 
  • Great article. At credit unions we all know the value of educating the younger generation. Yet, most have not allocated the resources towards this goal. It is encouraging and enlightening to learn of the approach taken by the Generation Community credit union.
    Anthony Hinds