Offer Accessible Financial Education

Credit unions can reassess their financial education outreach efforts during April’s Financial Literacy Month.

 
 

April marks National Financial Literacy Month, a time that credit unions can focus on helping members improve their financial wellness.

Financial Literacy Month, which began in 2006 and is promoted by the National Foundation For Credit Counseling, is an effort to teach American healthy financial habits. To support the initiative, Money Management International, a Houston-based nonprofit credit counseling agency, has created a 30-step process for getting on financial track that can coincide with the 30 days in April. Steps include financial quizzes, tips for saving for retirement, and ways to create a budget.

Many credit unions, such as Mountain America Credit Union, have been joining the effort. The Utah-based credit union’s CEO Sterling Nielsen, was among eight financial institution executives who rang the New York Stock Exchange’s opening bell on Monday as they were honored for their financial literacy program.

Mountain America Financial Services, a subsidiary of Mountain America Credit Union ($3.0B, West Jordan, UT), recently partnered with 8 Pillars, a financial literacy company, to provide a free financial wellness course for employees. The credit union, which also teaches financial literacy classes to high school students throughout Utah, will hold a similar free financial literacy seminar for the public this month.

“Mountain America has noticed an increasing need to help people achieve their financial goals – a way to get back to the basics of financial understanding and build toward secure financial futures, says Gene Erickson, COO of Mountain America Financial Services in a press release.

Financial literacy is essential to the nation’s economic healthy, says Robert Ferguson Jr., vice chairman of the Federal Reserve and president and CEO of TIAA-CREF Institute, a financial services organization, in a Time article this week. Only one-third of respondents answered all three questions on a TIAA-CRE Institute survey correctly. And Ferguson says that problem is likely to worsen as financial decision-making becomes even more complex in the years ahead. Only four states require high school students to take a financial literacy course.

“The cost of this financial ignorance is high, leading many people to incur avoidable charges and fees from things like making late credit card payments or paying only the minimum amount due, overspending their credit limit, and using cash advances,” Ferguson writes.

MMI offers more shocking statistics about consumers’ money management skills:

  • The total U.S. consumer debt is $2.40 trillion.
  • The average consumer spends $49,638 a year buying both needs and wants.
  • More than two in five adults (43%) now keep a close track on their spending, but more than half (65%) still do not have a budget.
  • Three-quarters (74%) of Americans are cutting back on non-essentials, such as dining out, to cope with the current economic conditions.
  • When faced with financial challenges, 27% of Americans said they would reach out to financial education service providers, such as credit counseling services, first.
  • The Average APR on a new credit card is 14.73%.
  • Nearly 28% of adults do not pay all their bills on time.