How are your members spending their money, and where can you help them make improvements?
Want to step into the shoes of an average consumer facing down their budget and determining their holiday prospects?
First, take $62,857 (your yearly household income) and divide it into five roughly equal piles. If you actually have $62,857 to do this, congratulations..., if not, Monopoly money makes effective alternative. Now, keep one pile and spend the other 4 (this is the fun part.)
According to Newsweek and the U.S Department of Labor, here’s how you would have spent it over the year. 12.99% for food, 34.43% for housing, 3.52% for apparel and services, 15.61% transportation, 6.37% for health care, 5.49% for entertainment, 11.15% for insurance premiums, and 10.45% for miscellaneous spending. Now, here’s the real question. Now that you can see, easily and holistically, where all your dollar bills have gone, would you still spend it the same way going forward? Some of these are required monthly costs that must be addressed, but others areas present potential for flexibility.
Ignorance of this difference is bliss for holiday shoppers who don’t keep track of their budget or put off looking at their financials until it’s too late, but it’s a temporary bliss at best. This is why the budgeting and spending analysis tools incorporated into the next generation of personal financial management are so imperative to your members.
Even properly communicated, not all members will take advantage of these tools to stop spending beyond their means (says one spender in Newsweek’s article called The Urge to Splurge, “I don’t even look at my bank statement, it’s too stressful.”)
But those who do posses the right mindset and a demonstrated commitment to change can and will use PFM spending analysis, along with any available credit counseling. These tools let credit unions foster real responsibility and accountability in how members think about their finances.
If you’re fortunate enough to already have these capabilities, think of the marketing opportunities the holidays can provide to boost such services, “Set a resolution to trim your financial waistline, sit down with one of our financial counselors today” or “Don’t find a lump of coal in your wallet this Christmas, plan ahead with our PFM.” It’s a gift your members truly need this holiday season.