How would you rate your members’ financial literacy? And what about your own?
Personal finances are in sharp focus for many with the recent rise in interest rates, credit card delinquencies and talk of higher inflation. This cannot be said, however, for financial literacy, which is the ability to make effective financial decisions. In fact, surveys consistently show financial literacy is a blur for most people.
Data from the recent Brightplan 2022 Wellness Barometer Survey highlights this deficit. In fact, Brightplan's survey suggests there is a crisis in financial literacy.
The following test was given to 1,500 knowledge workers from various industries across the U.S.
TRUE or FALSE
You should pay off credit cards each month
Funds are taken from a debit card immediately
15-year mortgages require higher monthly payments that reduce total interest
Credit card interest is the price you pay for borrowing money
401(k) contributions are not taxed until withdrawal
The answer to all of these statements is TRUE.
Yet only 13% of workers answered at least four out of the five financial literacy questions correctly, a decline from 20% in 2021.
Ironically, knowledge workers are defined as workers whose main capital is knowledge. Examples include programmers, physicians, pharmacists, architects, engineers, scientists, design thinkers, public accountants, lawyers, editors and investment bankers.
The survey also finds employees stressed about finances with the key concerns being debt, inflation and retirement planning. Some staff, when given a choice, would even trade workplace benefits for financial education.
The findings may surprise you, but they shouldn’t be ignored. People are asking for financial knowledge. The right response is to meet their needs.
What can credit unions do? Here are five winning recommendations.
Recognize that improving your membership's financial knowledge improves their financial well-being. And, in turn, your own.
Conduct the test shown above with your team. It's a great way to engage and teach valuable financial-industry skills and knowledge.
Poll your members' financial literacy capabilities. This is an opportunity to engage with your members.
Start a financial literacy program. Your members and community partners will thank you.
Ask me about it. We've helped over 200 credit unions bring financial education to their members and communities. Our It's a Money Thing financial education program is full featured, fun, loved, widely cited and the results have been amazing.
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.
