Credit unions are looking for ways to modernize their financial literacy efforts.
The credit union industry has a long history of providing financial education, from visiting classrooms to discuss money with elementary school students to presenting role-playing exercises for teenagers that get them used to budgeting for daily expenses.
But there is evidence that more can be done to better prepare young adults to manage their finances. The industry is looking at ways to add more digital and interactive components to help members learn.
“Managing money is a life skill that we all use every day so there isn’t a downside to financial education as long as it is proven effective and comes from a reliable source,” said Paul Golden, a spokesman for the National Endowment for Financial Education. “It is up to both schools and parents to do all we can toward educating youth. But we cannot be in the mindset that it is a one-time offering and we have checked the box. Teaching people about money should continue through our economic lifetime.”
According to a study from the TIAA Institute and the George Washington Global Financial Literacy Excellence Center, millennials answered just 44 percent of questions about personal finance correctly, compared with half of all U.S. adults. Only 11 percent of millennials demonstrated a high level of knowledge by answering more than 75 percent of questions correctly, the study found.
Providing educational programs – whether through digital platforms or more traditional pen and paper formats – doesn’t matter as much as the quality of the material and the instructor presenting it, Golden said.
The educator needs to be well trained. The materials should be independently evaluated in addition to being timely and relevant to the age it is targeting. And there should be a way to evaluate whether the program has been effective, Golden said.
“As it pertains to young adults we have to understand the challenges they are facing are more than just debt,” Golden said. “We must help millennials understand that financial capability is a balance of managing assets and liabilities, and planning for challenging circumstances. Ultimately, we have to empower them to do it on their own.”
Redoubling efforts
The management team at Merrimack Valley Credit Union in Lawrence, Mass., saw the study by George Washington Global Financial Literacy Excellence Center and decided to act.
The institution already served as host for financial literacy role playing events at a local high school, but it wanted to shift its focus from high school students to young adults, said Yean-Ai Long, vice president of marketing. It also wanted to reach a wider audience through an online program.
Given those goals, it launched CashIQ, a web-based application where players can test their financial knowledge and win prizes, earlier this year. The $616 million-asset credit union worked with Wedu, its ad agency in Manchester, N.H., to develop CashIQ, which currently is exclusive to Merrimack Valley.
Each category has 10 questions, with one point awarded for each correct answer. Once players accumulate enough points from multiple quizzes, they can redeem those points for prizes from Merrimack Valley, including a $25 credit when opening a new checking or savings account, a $100 gift card when financing a student loan and up to $510 credit toward an appraisal for a mortgage.
In addition, every entry is entered into a raffle. A winner is drawn for a $50 prize every two weeks, with a $500 grand prize in the final drawing.
CashIQ launched in late August, and so far more than 7,000 people have used the program. About 80 percent of quiz takers have been millennials. Other credit unions have inquired about using the same model, Long added.
“The point of doing this online was not necessarily to have people come to our branches,” Long said. “We want to make it easy for people to learn things they can apply back to their own lives.”
Merrimack Valley primarily is promoting CashIQ through its social media accounts, YouTube and direct member communications. It also has a billboard on the main highway through the Merrimack Valley.
“We have always been very focused on financial education,” Long said. “We want to teach our members how to be more financially savvy, how to improve their credit score. We see CashIQ as a new, more innovative way to do financial literacy. We can reach our members and a wider audience. This is a way for millennials to learn. I believe this is the way to go in the future.”
Uncommn Marketing Partners, a Greenville, S.C.-based company that offers web design, search engine optimization, social media management, ADA website compliance and pay-per-click advertising solutions to credit unions and other organizations, recently acquired Marketing Partners, a marketing services company based in Bethlehem, Pa. Marketing Partners offered several youth financial education programs used by many credit unions, including Dollar Dog, Cha-Ching Checking and The Edge.
One of the first tasks upon the blending of the two companies will be to revamp and update the youth financial education programs, which have been around for approximately 20 years and have not been changed much since their inception, said Bo McDonald, president of Uncommn.
He anticipates making the programs more interactive, adding a musical component and including more video content and apps. Uncommn has already begun assembling advisory panels of existing licensees of the youth programs and new users to get feedback.
McDonald said the next step will be talking with parents and children to find out how to better serve them. He anticipates rolling out new versions of the programs in early June.
“A lot has changed in 20 years, including the mediums in which children – and their parents, who probably were youth 20 years ago – consume media and information,” McDonald said.
