How Much Are Credit Unions Spending On Financial Education?

Do credit unions put their money where their mouths are when it comes to member education? How much did credit unions spend on financial literacy in 2007 and how much will they spend in 2008?

It turns out those credit unions that provide financial literacy for both young people and adults spent a little more than $21,000, on average, last year.

Of course, this excludes staff time or salaries and does not include credit unions with less than $10 million in assets.

The bigger the credit union, the more it spends. After all, they have more members and more resources. Average expenditures range from just less than $6,000 among smaller credit unions to more than $50,000 among those with assets of $500 million or more (Fig 1).

So what is a member's financial health worth? No one can definitively answer that, but CUNA's analysis suggests credit unions with a money management program for both young people and adults spent 63 cents per member on average last year. Is that enough?

That's something each credit union has to answer but let's get one thing clear. The credit union movement can't say it's above average until it put its money where its mouth is.

The good news is larger credit unions are reaching deeper into their pocketbooks to educate members-both young and old-in recent years. Credit unions with more than $50 million in assets have increased their spending, on average, by 65% since 2005 (Fig. 2).

Looking deeper at the 2007 data we see that credit unions that choose to educate either adults or youth, spend an average of $11,000 for adults and $9,000 for youth. Of course, these expenditures rise with asset size (Figs. 3 and 4).

Should credit unions do more to educate their members about money matters in 2008? One of every two credit unions said they needed to spend more than they did in 2007 to accomplish their goals (Figs. 5 and 6).

Is it really necessary to increase the amount of financial education your credit union provides its members?

Maybe this information will help you decide. In 1984 Americans saved more than one-tenth of their income. Today the savings rate is slightly negative. That means the average American is spending more than they earn.

In fact, 34 million households took money out of their homes over the past four years by refinancing or borrowing against their equity. That's about one-third of the country. The savings rate for this group, according to www.Moody's Economy.com, was negative 13% in the middle of 2006.

The good news is that this group has improved its savings rate to negative 7% in 2007. These consumers have been borrowing heavily against their assets to pay for their day-to-day living and many of them won't learn their lesson unless you help educate them.

Here are some benchmarks to consider for your credit union's financial literacy program:

Fig. 5

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Use the "average" 2007 financial education investment for your credit union's asset size (Fig. 1) as the minimum investment for your activities.

Half of credit unions believe the funds they dedicated to member education in 2007 were not sufficient for what they wanted to achieve. The good news is these credit unions planned to increase their funding levels for 2008.

If your credit union wants to be a leader in the area of financial literacy in 2008, you can expect to spend at least 50% to 60% more than the 2007 averages for a credit union of your asset size.

Fig. 6

(click to enlarge)

Document and record your financial literacy efforts on CUNA's new Web site Personal Finance Initiative at "Report what you're doing". The site also provides credit unions with financial literacy research, best practices, and networking opportunities.

Next: Members' Need for Financial Education

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