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A new poll from the American Psychiatric Association’s (APA) Healthy Minds Monthly found that the ongoing COVID pandemic may not be the biggest worry Americans are facing in 2022. Anxiety stemming from inflation and the increased cost of living is surging among 90 percent of the American population, especially among Hispanic adults, mothers, Millennials, and Generation Z. This disparity, admittedly, extends to our nation’s credit unions and many of its members.

With inflation reaching a 40-year-high, the poll also revealed that over half of Americans are worried about a potential loss of income. Prices for consumer goods and services are skyrocketing, and households are carrying the weight of all the financial stress due to the unaffordability of the basic necessities to keep their families afloat. 

Nearly 40 percent of consumers cannot put any money at all into savings, according to analysis by American Consumer Crisis Counseling, and reported by CNBC. About 19 percent claimed they had to reduce their rate of savings. 

Families are fighting their financial health battles on multiple fronts, and making difficult decisions in the process. Contribute to savings and investments, or spend their paychecks on the daily essentials for their families? 

In a PYMTS report updated in February 2022, 61 percent of American consumers are still living paycheck-to-paycheck, an increase of nine percent since 2021. And even consumers earning $250,000 a year are fighting financial instability and, in many instances, beginning to take on more debt. In fact, credit card balances rose to a total of $841 billion in the first quarter of 2022, according to the Federal Reserve Bank of New York (FRBNY). Add to that debt levels could still increase due to increasingly higher consumer goods and services, among other essentials. For many consumers, the savings account may have to wait for a while. 

Credit unions encourage healthy financial habits in difficult times

Good thing we know that the credit unions were built for times like these. The very nature of the cooperative movement is the support and nurturing of its members’ financial well-being. Credit unions everywhere can implement financial inclusion and wellness programs that allow members to make more knowledgeable, well-informed decisions in whatever economic environment they find themselves. But getting there in today’s dynamic financial world requires a rich combination of the proper resources, financial literacy opportunities, and optimal access to easy-to-use digital financial tools. 

As we have come to realize in today’s contemporary society, without improved financial education a disproportionate number of consumers are finding it difficult to make intelligent and knowledgeable financial decisions, much less feel confident in the decisions they make. In fact, according to a new survey from the National Financial Educators Council and reported by the Banking Journal, a lack of personal finance costs an estimated average of $1,389.06 per individual, or $352 billion total in the U.S. each year. Additionally, almost 20 percent of those surveyed claimed they lost over $2,500 in 2021 because of gaps in financial knowledge. 

Evidence has shown time and again that financially-savvy consumers are more likely to plan, save, and compile less debt. Individuals with better financial literacy are also more resilient when facing financial difficulty or economic downturns like the COVID pandemic and this current inflationary period. The difficult mission for credit unions is enticing members to consistently address financial education and work to put those lessons and findings into action. 

inflation financial health
We know what you mean. According to American Consumer Crisis Counseling, nearly 40 percent of consumers cannot put any money at all into savings. Photo: Jen Theodore | Unsplash

Digital comes to the rescue with financial literacy

Fortunately we live in an innovative period where credit unions can employ financial technology and intuitive tools to enhance the education opportunities members need to improve their lives. Credit unions have all the data required to offer advice and steps to take that can empower their members with the knowledge that can help them achieve financial health and inclusion. Such advice could center on any number of topics – financial counseling, debt management, student loan payments, the value of borrowing, and most any other area in personal finance. 

Maximizing the marketing capabilities of each credit union’s digital and mobile banking assets for literacy, education, and mentorship outreach represent just three tactics to provide value while earning additional branding capital as a tech-savvy cooperative. Additional ideas include outreach programming like online educational luncheons or live-streaming financial literacy seminars that reinforce members’ trust and loyalty in their respective cooperatives.

Why not take the pro-active angle on financial literacy a step further? What if your credit union decided to incentivize your members to increase their advancement in financial literacy, enticing them to move forward and improve their overall literacy and education skills?

One example highlighted by the Credit Union Times includes having members read a value-based article on saving, have them correctly answer a few questions for which they receive a reward – possibly a small deposit into their savings account. Rewards-based, interactive programs are a great way for members to witness, work through, and find encouragement by establishing a mindset of positive, long-term financial health habits. They can then see and understand how to manage a budget while growing their savings, which can lead to increased account balances over time.

Giving members an engaging (maybe even entertaining?) platform to learn, save, and get rewarded for that effort embeds a worthwhile sense of empowerment they can look forward to when they apply those lessons in the real world. 

Offering the right financial health tools to empower members

Credit unions can assist their members in combating the effects of inflation by keeping a consistent eye on their monthly budget and any goals they set for themselves. Offering digital financial tools enable members to set goals, maintain progress, and pay attention so as not to overspend. When members pay consistent attention to their finances and financial goals, the easier it becomes to keep a budget and therefore contribute consistently to their savings accounts while avoiding late bills. 

Personalized digital banking alerts represent a fantastic buffer tool members can use, depending on the member’s specific needs. For example, a member may wish to be notified when their checking account falls below a certain threshold in order to keep their financial goal(s) in sight. While they have been available for years, alerts are one of those tried-and-true assets that can help members avoid the kinds of penalties like delinquent bill payments or even those dreaded “overdraft protection” fees. 

As mentioned earlier, there remain many individuals and households in America right now who struggle to even get started on that journey. They’re still trying to get their heads above the financial waters of economic distress.  That’s where QCash’s digital Life Event Loan platform comes in. Remember, the first step in the Five Pillars of Financial Health is borrowing. This valuable product represents the first step to achieving basic financial stability and remains a key resource in the mission to improve one’s financial health. Borrowing with their local credit union through responsible and affordable small dollar loans is a good choice for consolidating existing debt or dealing with emergency expenses.

QCash’s digital Life Event Loan platform features an easy-to-navigate application and approval process that finishes with a deposit directly into the member’s waiting account. In just 60 seconds, the funds your members may need – day or night – require no credit check and no more than a smartphone or computer to complete the super-simple process. 

Credit unions inspire financial inclusion to consumers needing financial help

Given the repeated blows across the head America has suffered the last three years, then add in the cost of living increases, and consumers are living paycheck-to-paycheck at continuously unsustainable levels.

So many hardworking people were already battling the effects of the pandemic, only to be hit with skyrocketing inflation right where it hurts the most – gas for their commutes and consumables like food for their families. Fortunately, credit union cooperatives remain committed to the mission, fully prepared to comfort their members, nurturing and guiding them as they navigate the uncertainties of this badly-timed inflationary period. 

By providing literacy guidance, education opportunities, and easily accessible digital financial tools like QCash, credit unions and their dedicated financial first responders can empower their members to employ smarter, more knowledgeable decisions to fulfill their ultimate financial goals!