How Credit Unions Use Financial Literacy to Strengthen Communities

Several initiatives have sprung up in the last few years catapulting the narrative of financial literacy, with notable programs taking shape in schools throughout the country. The need for a solid understanding of personal financial behaviors and the tools used to enforce them has spread rapidly in K-12, university, and college classrooms.

Recently, employers have taken a similar stand to help educate employees on how to manage debt, savings, and planning for retirement through financial literacy programs on and off site. But financial literacy extends far beyond the classroom or the conference room.

Institutions with community reach are now joining the effort to educate individuals on the importance of sound financial management and how to go about tackling the often daunting task.

Where Credit Unions Come In

Local, regional, and national credit unions are adding to the financial literacy movement in droves, and the reason behind the growing trend makes perfect sense.

Credit unions are designed to give consumers a different way to bank, based on establishing a relationship with members in which they are part owners of the financial institutions, not stockholders.

The majority of credit unions around the country have a similar credo: empower credit union members through affordable, beneficial financial products and services. Offering financial literacy resources, programs, and initiatives directly through credit unions helps support that vision.

Although credit union financial literacy programs vary, there are three main tracks through which financial education is offered to credit union members.

Financial Literacy for Adults

The FINRA Investor Education Foundation’s survey on national financial capability highlights the need for increased financial literacy awareness among the nation’s adult population.

According to FINRA’s data, 61% of adults are unable to answer more than three of the five questions posed in the survey related to financial knowledge and decision-making. Low levels of understanding lead to poor financial choices that have the potential to wreak havoc on one’s financial life for years to come.

Credit unions are stepping up to the plate to combat the low level of financial literacy within their communities by offering no-cost seminars and events to credit union members. Seminars range in length and topic, but the most notable presentations revolve around planning for retirement, understanding various financial and investment vehicles, and managing household debt.

Information provided to credit union members is often delivered through a casual workshop or interactive seminar in which participants have the ability to ask questions to further their understanding of the topic.

Credit unions that offer financial literacy seminars either utilize staff in-house or garner the support of professionals in the community to enhance the experience of attending members.

In addition to in-person presentations, a vast number of credit unions offer access to free resources, either online or in a branch location, about general money management, creating and maintaining a budget, and avoiding costly credit products.

On top of that, credit unions are capitalizing on this growing and urgent need by offering financial wellness education through online platforms. The partnership with BCU and Enrich Financial Wellness is the latest in an increasing number of progressive financial institutions responding to the needs of their members with this innovative technology.

Financial Literacy for Students

Several financial literacy initiatives are aimed at assisting students with gaining a better understanding of financial topics and how financial decisions impact their lives for the long-term.

Per a study conducted each year by the National Financial Educators Council, the average score on a financial literacy test was 60% for individuals 15 -18 years old. Most struggle with understanding how basic financial literacy plays a part in lifetime success and how financial products and services work in the real world.

Some credit unions have focused their financial literacy programs on helping this widely underserved demographic.

In New Mexico, two regional credit unions were awarded Experiential Learning grants to fund educational programs for area high school students, including a Reality Fair which allows students to create a real-world analysis of their financial situation based on the starting salary for their chosen career. By empowering students to calculate what it would take to pay for life expenses such as housing, utilities, and transportation, the credit union can improve financial literacy as younger generations move forward in their earning years.

In addition to fairs held for high schoolers, some credit unions partner with national financial literacy advocates to make resources readily available.

The Credit Union Network for Financial Literacy offers licensing to the Berenstain Bears financial book series which promotes financial education for younger generations. Similarly, the National Credit Union Administration makes available a variety of online resources for credit union partners to utilize in their communities to create meaningful financial literacy programs for students and their parents.

Financial Literacy for Educators

Another track credit unions follow to provide financial literacy to the masses is through educator resources.

Although there are several statewide initiatives in public and private schools which promote financial literacy among students, many teachers feel ill-prepared to implement programs in the classroom. To empower educators, some credit unions who serve large teacher populations offer seminars on how to intertwine personal finance into the curriculum in an easy, engaging way.

In addition to educational presentations made available directly to educators, some credit unions have partnered with local schools to bring financial literacy straight to the classroom. Instructors from the credit union take away the burden placed on teachers’ shoulders and offer financial literacy courses in person and online as a supplement to already established curriculum.

In some communities, credit unions help educators simulate a credit union branch in the school, giving students hands-on experience in managing the business of a credit union and providing education to other students about the types of financial products and services available through their local credit union.

An Important Step Forward

Financial literacy remains a necessary aspect of lifelong success as financial products and services continue to grow in number and complexity.

Whether initiatives are focused on planning for financial emergencies, saving for retirement, or borrowing responsibly, credit unions are taking an important step forward in the fight to educate community members through creative, impactful financial literacy programs around the country.