MADISON, Wis. (6/24/14)--People want to save money, but often they need help acquiring the skills necessary to achieve their savings goals.
That's the thesis of a report released by the Filene Research Institute this month, which demonstrates how a credit union can positively affect the financial health of its members, particularly those with low to middle incomes, by offering personalized financial management interventions.
The report illustrated the importance of this type of financial coaching by describing the results of a pilot program administered in a Portland-based credit union that compared individuals who received financial intervention with those who didn't.
Members who received help from a financial coach, the report found, earned 21% more in savings.
"The pilot has demonstrated that customized, one-on-one coaching sessions can help individuals remain accountable to their financial goals," Filene said. "For credit unions, the key is to remain invested in these individuals as they leave your branches."
The pilot program, Financial Health Check, was created by a nonprofit organization called ideas42, which hopes the program can lead to better financial health, especially for those lower on the income chain.
The nonprofit randomly selected members of a credit union to work with a coach who, among other steps, helped them set up automatic payments to increase their savings balance. ideas42 was able to compare two groups of about 400 people.
In addition to the pilot, the report also described what services an efficient financial advice product might feature, including guidance for members in setting specific goals, following through on intentions, setting up reminders and monitoring progress.
The bottom line? According to the report: "The more involved credit unions are in the financial lives of their members, the more success they will have in helping their members sustain financial responsibility."