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The prospect of an economic recession in the United States persists in this summer of 2022. While fuel prices have progressively – and with great relief – dropped in the last two months, consumers continue to get squeezed out of their budgets at the grocery store and beyond due to inflation. 

After all, inflation jumped 8.4 percent in July. While that figure is down from the previous month, it’s still close to a 40-year-high, suggesting to consumers that further cost-cutting and saving is necessary. According to a recent report from PYMTS and Yahoo! citing 2,633 U.S. consumers, 64 percent of Americans were living paycheck-to-paycheck as of January 2022. That statistic was up from 52 percent in April 2021, and slightly higher than the previous month. 

It’s not a coincidence these individuals and families are punished first, last, and hardest when rapid inflation hits and consumers have to start making difficult – often unwinnable – choices. As reported by Biz New Orleans, Louisiana residents are even more likely to struggle during this inflationary period. Sporting the second-highest poverty rate in the country at 18.5 percent, neighborhoods, communities, and municipalities around the state are trying to find ways to lessen the financial burden on households. 

Even food banks around the state like the Greater Baton Rouge Food Bank have seen food lines extended further than normal. The challenge is that the food banks themselves are experiencing their own economic challenges. Local consumer goods locations cannot contribute to the food bank like they could before due to supply shortages that have affected nearly every consumer industry. Additionally, traditional bulk food purchasing processes are less ample and more costly due to higher demands. 

Fuel costs have hit hard, too. “From a fuel cost perspective, our trucks are all diesel. So, we have to pay a diesel premium on top of what everyone else is facing,” explains Mike Manning, President and CEO of GBRFB. “We’re seeing an increased cost of bringing food in and an increasing cost of distributing food. So, for us personally, we’re facing the same challenges that many individuals are when it comes to the fuel cost.”

Photo: Jhon David | Unsplash

Help members get tools to mitigate inflation and achieve financial inclusion

We have said it before and we’ll say it again – the credit union movement is prepared to give an assist to consumers and members who need a guiding path back to financial health and stability. 

The very foundation of the credit union industry is predicated on being a central resource of financial health for members during challenging times like these. The creation and evolution of the credit union movement was centered on communities serving communities – people helping people – by reinvesting in their cooperatives and the member-owners therein. From Edward Filene to Louise McCarren Herring in the early 20th century, the guiding principle “Not for profit, not for charity, but for service” encompasses the spirit and operation that has made the industry so successful and stabilizing for untold millions of members.

Placed within the scope of what credit unions can do when faced with the challenge of high inflation, the answer is ownership and leadership; the very nature of how the credit union is positioned. Credit unions are, at their very core, organized to reinvest their revenue in order to benefit the members who are also its owners. Be it dividend payments, rewards programs, or lower interest rates on loans, the cooperative hinges on the members’ interests rather than self-dealing, self-serving shareholders. Point of fact: In 2021 alone, the Credit Union National Association (CUNA) reported that over $12 billion in benefits were passed along to credit union members. 

Another central mission of the credit union movement means focusing on the financial well-being of each cooperative’s membership and greater community. Their collective movement is not singularly meant to sell their members products and services, but to to help cultivate, educate, and support those members so they can financially succeed. By doing the right things and establishing a solid foundation, each cooperative can create trust and loyalty with each member resulting in a long-term relationship that can be a tremendous tool in setting up families for a lifetime of financial health and consistency. 

Oftentimes doing the right things to help members battle the effects of inflation means encouraging them to find ways to maintain a close eye on their monthly budgets. Offering a mobile or online personal financial management tool can support this practice by enabling members to set financial health and wellness goals, track their progress, set spending parameters, and avoid overspending. When members have an organized, complete, and comprehensive view of their financial situation and future financial goals, it’s so much easier and manageable to keep a budget, consistently contribute to savings, and avoid late bill payments. 

Lastly, the availability of mobile banking services has transformed the act of engaging with and maintaining a consistent relationship with consumers’ financial lives. Imagine a member’s finances taking a dramatic hit due to a lost job, furlough, or rapid inflation. Now, picture the ability to access your credit union account through your smartphone 24/7 to conduct whatever financial issues or solutions you need to improve your existing situation. 

According to Forbes Advisor’s U.S. Weekly Consumer Confidence Survey in late December 2021, three in four Americans, or 76 percent, have used their financial institution’s primary mobile app within the previous year for routine, everyday banking tasks like check deposit, viewing account balances, or applying for small dollar, life event loans. For millions of Americans, financial stability remains elusive – a seemingly distant island only to be seen in a television ad. 

Such sentiments only persist because that member often doesn’t realize the assets their local credit union offers. To begin their journey to improved financial stability, members can begin by taking the first step with their participating credit union’s QCash Life Event Lending platform. In just 60 seconds, the member can apply for the loan and, if approved, have the loan amount deposited directly into their account!

In challenging times like these, it is important for members to take a proactive approach to managing their finances. That practice, for instance, includes being aware of the financial assets available that will help members find their way out of the grip of a predatory payday lender by working with your credit union to find a common-sense solution that doesn’t put them even further underwater. 

After all, credit unions were created for times like these!