In case you didn’t get the news in your inbox, April is Financial Literacy Month, which means a whole month of working to increase financial education among members and inspire them to develop healthy money habits. Credit unions around the country are going all out for the festivities, organizing events to help their members become financially literate.

As credit unions, it’s our obligation—and hopefully, desire—to help our members obtain financial wellness. In order to do that, however, it’s important to first determine where members are struggling and what gaps in financial education they may have. Once you determine that, it should be much easier to provide resources and assistance.

Most members lack a budget

Setting a budget is one of the most basic keys to developing better money habits. It sets the standard for how much disposable income a member has to spend and is key to building savings and understanding their expenses.

Many people are nervous to set budgets because it means diving into their finances and examining where they are spending and how much is being spent on wants (fast food, entertainment, clothing, etc.) in comparison to essentials (rent, groceries, gas, etc.). Alternatively, many members may not even know how to develop a budget or track their spending.

According to the Penny Hoarder, “A little over 55% of Americans do not use a budget to manage their hard-earned income, and a similar 56% of survey respondents said they didn’t know how much money they spent last month.”

The lack of a budget means that member is failing to track where they’re spending and how much. This makes it all too easy for them to overspend without noticing. Setting a budget will support them in staying on top of their money goals, and products like card controls and push notifications can help members stay on track by alerting them to large purchases and keeping them up to date on their spending habits.

As credit unions, we should be working to teach members the benefits of a budget and what tools they have access to that will assist them in making and adhering to said budget. Consider offering webinars or classes on budgeting. Are you letting your members know the benefits of push notifications? Even a blog post or two shared on social media could make a difference.

Members are failing to save

Along with budgeting, building good money habits starts with building savings, but that can be a huge obstacle for many members who live paycheck to paycheck, are facing financial emergencies, or are burdened with loans. Furthermore, if members aren’t budgeting, as we learned most aren’t, it can be incredibly difficult for them to build up savings.

In a study conducted by Bankrate, “Nearly six in 10 Americans don’t have enough savings to cover a $500 or $1,000 unplanned expense. Only 41% of adults reported having enough in their savings account to cover a surprise bill of this magnitude.” This means that it only takes one trip to the emergency room, one water leak, or one fender bender to completely wipe a member of their savings.

Without any savings, members’ checking accounts can become even more strained, which makes it all too easy for them to fall behind on bills and overdraw their accounts trying to do simple tasks like pay for groceries. Once they’re in the hole, overdraft fees and late fees make it harder for them to get out.

If a member doesn’t have a savings account with you, how are you reaching out to encourage them to open one? Do you offer an auto-savings program that puts a certain amount into their savings account each week? Does your credit union have savings accounts for children? Teaching kids to save from a young age will help them understand the importance of money. Whatever products or services you may have for savings, let your members know about them and find ways to help them save more!

Many are burdened by student loans

Learning to budget and save can be assets to a member working to repay student loans. However, with an average monthly payment of $450 per month, student loans can also affect a member’s ability to save money and follow a budget, leaving the member in a catch 22 situation.

Of course, one big aspect that can assist with student loan burdens is educating high schoolers on loans before they take them out and encouraging them to understand the loans (e.g. the total amount, when they need to pay them back, and how interest works). Many students don’t get involved in the details and have their parents find and compile the loans for them. As loans are viewed as a necessary but daunting price for higher education, many don’t consider alternatives or look too closely at the details of the loans.

Early education can help them make smarter choices in which loans they choose. In fact, according to the FINRA Investor Education Foundation, young adults who had state-mandated personal finance courses in high school are less likely to borrow high-interest loans than those who weren’t required to take the courses.

While credit unions aren’t in the position to remove a member’s current loans, they can offer meetings with a financial wellness coach and advice on easing the burden of loans such as consolidation, signing with a lower interest rate, or income-based repayment plans.

Lack of savings and credit makes it difficult to get a house

Getting a house is a big step for members, but the current market makes it difficult for even financially-stable members with the recommended 20% down payment, let alone those struggling to save and budget, to compete with cash offers.

The standard down payment of 20% for a house can be overwhelming for members. 44% of Americans who don’t own a home said a lack of down payment savings is their biggest obstacle. Let’s do the math.

For a house costing $250K, a 20% down payment is a whopping $50,000. Remembering that six out of ten Americans don’t have enough savings to afford an unexpected payment of as little as $500, expecting them to have 50K set aside for a down payment is unrealistic. No wonder the average down payment on a house is closer to 6%. Which of course means PMI, a higher loan payment, and tougher road ahead.

Aside from lacking down payment funds and affording the overall expense of a house, many cannot pass the credit check required to get a mortgage. Lending Tree notes that only one-third of Americans checked their credit score in the last year, and even more have misunderstandings about how credit operates, such as the belief that marital status affects their score.

Of your members looking to get houses in the next few years, how many have a strong savings account and credit score? For those who don’t, how can you help them get there?

What’s a 401(k) and why don’t members have one?

Younger members often don’t feel the pressure of needing to save for retirement the same way older members might. Many don’t understand how retirement accounts such as a 401(k) work (a Greenlight study found that 46% percent of teenagers don’t even know what a 401(k) is), and as such, it can seem like an unnecessary loss of income that could be put toward essentials like bills and groceries.

While these younger members are missing out on time and opportunities to save for retirement and may not understand why it’s important to start saving now, the problem is certainly not limited to them. The U.S. Census Bureau notes that 79% of all workers are employed at a company that offers a retirement plan, and of those only 41% contribute to it. This means roughly 67% of workers are not contributing to an employer-sponsored retirement plan!

Furthermore, 13% of adults 60 and older have no money saved for their retirement. The same study found that the number bumps up with women ages 55-66, 50% of whom have no personal savings for retirement. With an average retirement age of 62, this lack of funds means these individuals will be working to earn and save during the years they are meant to be relaxing.

The credit union should be working to impart the importance of retirement funds to their members and help them develop a plan. Have you checked in with your members to see where they’re at in their retirement funds? Offering a webinar about how 401(k)s work, what personal retirement plans are, and how to set one up could be a great chance for members to understand the importance of saving for retirement.

Only you know your members

Chances are, your credit union has members who are struggling with one or multiple of the subjects above. Financial Literacy Month is a fantastic opportunity to connect with your members in areas where they could improve. Consider what resources and educational opportunities you offer for each of these categories and how you can incentivize members to take part.

Are you reaching out to students to discuss financial literacy and empower them to make smarter choices in regard to loans? Do you have tools and tips readily available for members interested in making a budget and increasing their savings?

A credit union’s relationship with its members shouldn’t be limited to conducting transactions. Our foundation as cooperatives inspires and requires us to do more. Research today shows that consumers in America have large gaps in financial literacy and building a foundation of strong money practices.

The areas we covered in this article are some of the major subjects in financial literacy, but only you know your credit union’s members. It’s up to you to know where your members might need assistance and some additional education. Financial Literacy Month may only last a few more weeks, but the credit union should be there for them all year long.

You can find all our articles on financial literacy here!