With the New Year quickly approaching, there’s no better time for members to take inventory of their finances and set themselves up for success in the coming year.
Credit unions are trusted financial partners, and it is their duty to help guide members down the road toward financial fortitude — whether through providing the best rates, products and services, or by offering sound advice on proven budgeting and saving best-practices.
Here are five strategies credit unions should adopt to better equip members with the tools and information needed to achieve financial freedom in 2017:
Help members fully understand their financial situation. Members can’t figure out where they need to go to achieve financial success if they don’t know where they currently stand. It’s critical that credit unions enable members to see their entire financial picture clearly by providing aggregated data all in one place – online. It’s very important that their user experience in the digital space mirror their in-branch experience as closely as possible. To accomplish this, invest in an intuitive, streamlined website that reflects your brand’s visual identity and messaging. Members will be much more inclined to track their spending and account trends, create budgets and analyze debt and payment options in an enjoyable digital environment.
Coach members on budgeting best-practices. Encourage your members to assess their current spending habits and recognize what needs to be addressed when discussing their budget. Some costs — mortgage, auto loan payment, insurance, etc. — stay the same every month and are not eligible for the chopping block. However, money spent on non-essential activities such as eating out, online shopping or travel can be easily addressed, adjusted or eliminated completely depending on the member’s circumstances. Once members have taken a holistic inventory of their current expenditures, they’ll be able to better see what can be scaled back to accommodate their financial goals. Credit unions should provide budgeting best-practices and direct members toward additional resources that may be helpful given their situation.
Educate members about retirement and investment options. Although it is not always possible, members should be saving and investing at least 10 percent of their monthly earnings for retirement. Credit unions need to employ financial advisors who have the expertise and experience required to help members select the right IRA plan and explain the various tax advantages associated with contributing to retirement accounts. Credit union financial advisors should also be able to offer counsel to members in a position to invest further, or connect them with trusted external resources equipped to handle diversification and portfolio-growth strategy development.
Teach members debt-elimination strategies. It’s no secret that one of the most attractive aspects of membership is the low interest rates credit unions provide on loans. Therefore, credit unions must be vigilant in their commitment to protecting members from taking on debt they cannot repay. For members struggling financially, make them aware of options available that may ease their climb down the debt ladder – including debt consolidation, if appropriate. Complete debt elimination is the most important step toward achieving financial freedom, and credit unions have the power to help members move the needle in the right direction.
Encourage members to set realistic financial goals. Many of us make financially motivated resolutions each year, and credit unions should encourage members to set realistic, attainable financial goals. It always sounds great when someone claims he or she is going to pay off a mountain of debt in a calendar year, but more often than not it is simply not feasible. Reachable benchmarks, on the other hand – set through a careful budget and income-to-debt debt ratio analysis – are much more conducive to success. Members need a financial coach, not a “yes-person.”
So, as 2016 comes to a close, let us all make an industry resolution to better serve our members by helping them achieve financial freedom in 2017. Our collective success truly depends upon it. Happy New Year!
