Financial Wellness Is More Than A Campaign Pledge

Credit unions have the opportunity to build on historic growth by helping members achieve fiscal fitness, one family at a time.

 
 

Hot buttons in this year's presidential election cycle include income inequality and the financial health of everyday Americans. Credit unions already do a lot when it comes to the latter, but they can do much more.

As an industry, performance metrics have never been better. Credit unions have nearly 104 million members and more than $1 trillion in share balances — new all-time highs. They're posting record market share in mortgages and auto loans. And more than half — a full 55% — of credit union members now have a checking account at their credit union.

The Federal Credit Union Act, a product of the Great Depression, says credit unions exist to serve people of modest means. To many, that means low incomes. But it's much more than that. Many people with steady jobs and decent incomes are just a payday away from financial disaster.

Credit unions are building on their well-deserved reputation for stepping up in hard times.

Studies show that up to 75% of U.S. households report they are living paycheck to paycheck. And according to the "Report on the Economic Well-Being of U.S. Households in 2014" issued last May by the Federal Reserve:

  • 47% of nearly 6,000 survey respondents cannot cover a $400 emergency expense without selling something or borrowing.

  • 31% went without some form of medical care in the previous 12 months because they could not afford it.

Just like the medical community, credit unions are in many cases pillars of their community, whether they're community charters or SEG-based, perhaps serving a community of teachers, air traffic controllers, or machinists. So what are credit unions doing to boost the financial wellness of their members?

Consider financial wellness a meta issue that the credit union movement as a whole can get behind; it can be a catalyst for action and a rallying cry to help the industry continue on its upward trajectory.

Now is the time to double down on the credit union difference and spread financial health and wellness. Read more about this in, "Financial Wellness Is A Big Idea For 2016"

Then, think about financial wellness from the individual credit union's point of view. It should be a part of every organization's strategic thinking every day. For example, credit unions used those record deposits to loan a record $410 billion in 2015. But what about the loan-to-share ratio of individual members?

There is a lot credit unions can do to help ease members' debt burden. A plain-vanilla credit card that charges 10% interest instead of the 13% or more they're paying elsewhere could be a start.

And preparing for retirement? If a member's cash flow permits, a 10-year mortgage would pay off that house before the twice-monthly paycheck ends.

Credit unions are already building on their well-deserved reputation for stepping up in the hard times — for example, easing loan terms when a SEG is hit by layoffs or offering lower rates on loans and higher rates on savings.

Visit the CreditUnions.com Blog Roundup for Callahan commentary, industry insights, leadership perspectives, and more. Read Now.

More importantly, there's a trust there, the belief that credit unions are there to do the right thing. Now it's time to build on that, to expand those relationships, to do the most good for the most people. The best way to do that is one member at a time, new or existing, and making sure that in this era of universal staffers, everyone on board knows how to identify the best way to help everyone out there, at the teller line or online.

As you peruse the data presented here, please think about what you can do to ensure your credit union is on these lists next year. And please don't hesitate to reach out to Callahan to suggest ways we can help you get there, including sharing how other credit unions are doing it and how you can, too.

 
 

April 30, 2016


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