Financial fragility
Too many adults can’t come up with $2,000 in under 30 days. How many members of your credit union face this dilemma?
A few weeks ago, a friend asked if I could recommend a reliable plumber. His hot water tank was leaking badly, and he likely needed a new one.
I did know, and recommended, a good plumber. And my friend did need a new hot water tank. After the "friends and family" discount, the new hot water tank and installation came to over $2,200.
Unexpected expenses, or financial shocks, are bound to happen sooner or later. Car repairs, medical bills, major plumbing problems or residential repairs can quickly turn into thousands of dollars.
How many of us could just withdraw money from our savings to pay for that kind of expense?
According to a recent report from the Stanford Center on Longevity and the Global Financial Literacy Excellence Center, one third—roughly 27%—of Americans couldn’t cover an unexpected expense within a month. They'd have to turn to credit cards or a payday lender, borrow from family members or sell possessions to cover the cost.
Clearly, the consequences of being poorly prepared to weather a financial shock are bad for both members and the credit union's financial health and well-being.
Building members' financial resilience and strength should be a top priority for credit unions. And a good financial literacy program—particularly one that covers how to build an emergency fund—is a good place to start.
GFLEC’s research also finds that there is a strong correlation between financial literacy and financial fragility. Individuals with high financial literacy are much more likely to be able to have the capacity to face a financial shock. They're also more likely to be productive credit union members.
At Currency Marketing, we specialize in financial education. Our financial literacy program, It’s a Money Thing, operates in over 120 credit unions across the Unites State and Canada. We offer 48 financial topics, many of which teach financial preparedness and resilience. See the full list here.
Members, employees, teachers and students love It’s a Money Thing for its educational and fun style and the volume and variety of content. Credit union leaders value It’s a Money Thing for the benefits it provides to members and the community.
If you have any questions, don't hesitate to get in touch. I'd love to demonstrate how It's a Money Thing will benefit your credit union, your members and your community.
Tim McAlpine is the Founder & CEO of Currency Marketing. He is best known for developing the It's a Money Thing Financial Education Program that credit unions from around North America are using to connect with new young adult members. He is also a driving force behind CUES Emerge, an emerging leader program that combines online learning, peer collaboration and an exciting competition component.
