Despite significant investments in financial education in the United States over the past 10 years, young adults lack adequate knowledge of personal finance facts and tools to navigate the financial marketplace. In this special report, researchers Bob Hoel and Ron Smith found that conducting quick, low-cost financial education seminars to graduating college students could be a potent tool for credit unions to engage with young adults at a pivotal time in their financial lives.
What is the research about?
Citing statistics and figures from industry and academia, it is apparent that new financial consumers are starting their financial lives at a disadvantage. To remedy this situation, Hoel and Smith developed a unique financial literacy program called the Financial Independence Seminar. This program is held in partnership with a local university, its alumni association, and the business school faculty. Specifically, credit unions should consider further developing similar financial literacy programs that are:
- Delivered to segmented audiences that are receptive to the customized information and ready to act on the suggestions.
- Developed and presented by third parties.
- Structured as voluntary programs with no “classroom hostages.”
- Measured for effectiveness and changes in participants’ behaviors.
What are the credit union implications?
Financial literacy is a potentially potent tool for credit unions. The data presented in this report show that when financial literacy is done well to a targeted group, it works and produces genuine results. Given the credit union mission of service over profits, programs like this could be hallmarks of the credit union difference. Current efforts in financial literacy are either not being measured for effectiveness or show little impact on the end consumer’s behaviors. The Financial Independence Seminar, while developed for graduating college students, contains many elements for a new generation of financial literacy efforts.
This report is sponsored by PSCU Financial Services.