The National Credit Union Foundation will celebrate Financial Capability Month with daily tidbits on financial health, Foundation Executive Director Gigi Hyland said Wednesday. Writing on LinkedIn, Hyland said that these tips will have a weekly focus on a different aspect of financial health, financial capability and the intersection between the two.
“Financial capability vs. financial health. What’s the difference, you ask? Think of financial capability as the foundation (pun intended) for financial health. Our friends at Prosperity Now have defined financial capability as ‘the capacity, based on knowledge, skills, and access, to manage financial resources effectively,’” she wrote.
“So now, financial health. Our friends at CFSI have defined financial health and developed eight steps to measure it. Financial health ‘is achieved when an individual’s day-to-day financial system functions well and increases the likelihood of financial resilience and opportunity,’” she added. “CFSI also has identified four key components of a person’s financial health: Save, Spend, Borrow and Plan.”
The Foundation will focus on one of these components each week, starting this week with “Save.” Wednesday’s topic was emergency savings, and Hyland cited a study that showed 40% of Americans couldn’t come up with $400 in case of an emergency.
“Credit unions—that’s your call to action. Make sure you have a mechanism – a share account, a no-barrier-to entry share certificate that allows people to save for whatever emergency may happen. And they do happen,” she wrote.