The youth of America are increasingly faced with making financial decisions without the appropriate knowledge and education. Ninety-two percent of sophomores in college have at least one credit card. Compare that percentage to this one: 50.2% - a failing grade- was the average score among high school seniors on a financial knowledge survey. Furthermore, there has been a 50% increase in bankruptcies among people under 25. Credit unions have a challenge to help improve financial literacy among our youth. Here is a case study example of how one credit union is helping with the cause.
Last year, State Department Federal Credit Union (Alexandria, VA $720M) put youth involvement and financial literacy at the forefront of their objectives, and they have made significant strides. Currently they visit a local school to teach first and second graders about financial responsibility. "The kids just love it. They're so eager to learn, listen, and respond," says Susan King, Credit Officer at State Department FCU.
Several students and their families are in financial need at the school. "Our goal is to ease the tension in the children's homes regarding money and financing. We want to help foster a more peaceful environment in which parents and children can interact about money issues," says Susan. In order to achieve the credit union's goals, they are not only teaching responsibility, but they're also facilitating an environment in which the children can put their lessons into practice. This environment is called a branch, and its staff and members are made up of only the students.
Every Tuesday morning, fourth and fifth grade students open up the Jefferson-Houston branch of State Department FCU in the school for about two hours. Students can bring in grandma's check or even a few cents and make a deposit into their account. Just like any other branch, they receive a written receipt and a monthly statement. "We're having a great time with it," says Susan. The program's success offered a few tips for any other credit unions looking into opening a student operated credit union and establishing a financial literacy program:
Get support from the board. The Board has to be behind the initiative so that management will support it and release their staff to volunteer at the school.
Need dedicated staff. We need four employees to volunteer each time we visit the school. It helps to have a staff that is excited and eager to participate.
Ask very little of the school. Arrive prepared, asking only for some space to set up your branch. Although schools are excited about their partnerships, they often have very little time and resources. We used our own materials and supplies, and even came bearing gifts.
Follow up with parents. Go to a PTA meeting and answer any questions the parents have about money issues, credit issues, or questions about the credit union. Contact the parents and remind them that they can join.
If you're interested in how much it costs to open a new branch and establishing a financial literacy program, check out Susan's budget and a few of her comments below: