Offering Budget Assistance to Build Loyalty

The following post was written by Aubrey Knorr, a teller at Maine State Credit Union. She has been with the credit union for a year and a half and has been a great member of the MSCU team. Enjoy!

Finances are on everyone’s mind lately.

Due to the rising prices in our economy, we all are trying to re-write our budgets to cut out all of the pointless and unnecessary spending. We are re-thinking what’s really important. Unfortunately, setting a budget and actually sticking to it are not strengths that a lot of people have.

As a credit union, it’s our job to help our members to the best of our ability. Most credit unions don’t have actual financial advisors to assist members with these matters; there is a way to help our members in this area using the employees that we already have.

Many employees already know how to analyze and manipulate numbers. This talent can be utilized by placing them into a position that would enable them to sit with members and plan out budgets that the member can stick to, based on the members own income and expenses.

In a world of rising gas, food, and energy costs, on top of loans, credit cards (about 15% of people have more than $10,000 in debt!), childcare, and working long hours, our members need our help. If we can help them to consolidate and cut back with a budget that they can stick to, they will learn to trust us with any of their financial needs.

It will help us to gain more members with more accounts, and a lot of loyal people who will always come to where they are best served. Every credit union and bank has loans to offer and accounts to use, but how many have people that actually sit down with the member and go over their financial assets and needs with them?

We need to start looking at the newest needs of our members, and that is coping with the ever-changing fluctuation of the economy.

Mmmmmm…Financial Education: Is there anything it can’t do?

The following post was written by a friend and fellow Maine State CU employee, Dan Emery. He is a teller here at the credit union and has really stepped up in an effort to bring financial literacy to the front of our minds through research and connections.

Operating a successful business is anything but simple. It doesn’t matter what type of business you’re in, there are worries and challenges at every level. These include supply and demand, profit and loss, service standards, product standards, employees and payroll, the budget, change and improvement and the risks associated with decision-making. Before a business makes a decision it has to take into account the advantages and disadvantages of that decision. The litmus test for a decision is ultimately the bottom line; is it going to make money or will we lose money?

Credit unions deal with these same issues but we have a unique situation. Our litmus test for decisions is very simple; “Is this good for our members or is this bad for our members?”

Sometimes, to do what is best for our members we have to spend money that we may not recover in a typical sense, but it will help us gain loyal, long term members. Other times an opportunity presents itself that is beneficial to both the membership and the bottom line. This opportunity is Financial Education.

Here are a few statistics on financial literacy in our country today*:

• 15 million adults receive phone calls from collectors or are considering filing for bankruptcy.
• Only 2 in 10 keep track of their spending – regardless of gender, age or income
• Only 59% of young adults in Gen Y pay their bills on time
• The majority of Americans do not have a sufficient emergency fund (3 to 6 months of income saved)
• More than 76 million adults say they do not have retirement savings

These stats are only the tip of the iceberg. With a little research you will uncover MANY more shocking statistics like these. So what do we do about it?

We need to help these people take control of their finances! We need to teach them how to budget, spend responsibly, save, reduce debt and build assets. This should not be a one time class; this should be a multiple step process over an extended period of time. We need to create one on one relationships with our members. We should let them ask questions and then help guide them to determine their goals, wants and needs.

How will this benefit our members? Through this process we will build a bond with our members that will make them feel respected, empowered and comfortable and we will earn their trust on an entirely different level. They will gain an understanding of their finances that will give them control, hope and less stress. It is a great feeling to have control and an understanding of your finances.

So what does the credit union get in return? Most importantly we get happy members!

We will create a reputation that people find attractive and it will show we are truly worthy of their business. If we help one person take control of their finances they will tell others how well they’re doing and how it happened; our name will get mentioned and we will attract new, long term members.

Gaining new, financially educated members will result in new accounts, new loans, more loans paid on time, fewer overdrafts and bounced checks, higher balances and more frequent use of our services by more people.

Not only should we strive to educate our entire membership we should also strive to set ourselves apart service-wise. We should do our best to lower fees, raise rates and make our members feel like they’re a significant part of their credit union and not a customer.

A thorough financial education program is a solid, long term win-win situation for both the member and the credit union.

Dan Emery

Maine State CU

Save-or-Sink: Financial Literacy as a Brand Message

I’ll start this off by saying; I think credit unions have a huge opportunity coming up. Where many see a problem, we should see the opportunity to stay true to the credit union mission and to differentiate ourselves from banks.

What is this opportunity you might ask? Financial literacy of course!

According to The Young Americans Center For Financial Education:

• Of the 6000 students that took the Jump$tart survey, 62% of them failed.
• In the 18-24 age bracket 30% of their average monthly income goes to debt repayment.
• 45% of teen know how to use a credit card while only 26% showed understanding of interest rates and fees.
• Only 1 in 3 teens know how to read a bank statement, Balance a checkbook, or pay bills.
• Barely 1 in 5 teens know how to invest.

Judging by these numbers, the young people of our nation (“my” generation) have very little understanding of how to manage their finances.

This is a tragedy in my opinion, and many people don’t see a solution. I see it as an opportunity for credit unions to fill a void that perfectly fits our mission of people helping people and promoting thrift.

Financial literacy is often breezed over, if covered at all, during the average high school career. Though it is unfortunate, it is easy to see why. Teachers have so much to worry about teaching that financial literacy often doesn’t seem like a priority.

This is where Credit Unions come in. We have the ability, resources, and hopefully, passion to bring financial literacy to classrooms across our fields of membership. We are perfectly positioned to take advantage of resources like NEFE to help bring knowledge of financial management to students in our local area.

If you don’t already know what NEFE is, it is a non-profit organization dedicated to bringing people a financial literacy curriculum with a focus on high schools. They provide materials that are free to schools, including a full set of lesson plans, case studies, and workbooks. It is an incredible resource with a great track record of partnering with credit unions to bring it to local schools.

If your credit union hasn’t already looked into some kind of financial literacy program, now is the time to do it. The economy is struggling, debt is rising, and nearly a million people found themselves unable to stay afloat last year. The timing couldn’t be better for credit unions to jump in and help break the cycle caused by people living beyond their means. Many are finding themselves in a save-or-sink situation.

It is true that people just saving doesn’t benefit a credit union’s bottom line. In fact, if the dividends going out to deposit accounts aren’t matched by interest coming in from lending products, the profit margin can get tight.

Don’t think of promoting saving as an expense though, it is an investment in your community. When you teach somebody to save, it builds loyalty to your credit union. When they have some savings, they feel more comfortable, and are more able, to get lending products. Because they identify the credit union as the place that helped them to be financially sound, they are more likely to look at your credit union when shopping for a loan or credit card.

Show your community that you are looking out for them, teach them to be financially sound, and they will look to you more often when other decisions are at stake. Financial literacy is an investment in the future of your community. Though they may just be saving money now, they WILL be looking for that auto/home/personal loan in the future. If you can position your credit union as an advocate, it will be the place those people will look first.