A fundamental concept in financial education is distinguishing between needs and wants. Consumers tend not to discriminate between the two and could save money to meet their obligations or save for their goals by realizing that often they want something but they don’t really need it. The opposite is true for financial advice and education; many people realize that they do need it, but they don’t really want it. Credit unions should focus some of their financial education efforts on influencing their members and community members to “want” financial education assistance as well as “need” it.
According to a study by the National Adult Financial Institute at Indiana State University, less than 30% of U.S. adults view their personal financial knowledge as very good or better, and 8 in 10 think it is important that financial literacy be taught; however the majority of U.S. adults (65%) have not received any financial literacy instruction in the past 12 months. Participants in the study cite the lack of funds, time, access and materials as reasons for not learning more about financial topics. In addition, some 6 % responded that they are uncomfortable with financial literacy.
A similar study, conducted by Princeton Survey Research Associates International on behalf of the National Foundation for Credit Counseling, Inc. finds a similar lack of financial savvy and a tendency not to turn to professional financial educators for help. This study finds that only 59% of participants pay their credit cards in full each month and 28% don’t know that they can get a free copy of their credit report each year, but that 68% are “not too interested” or “not interested at all” about learning more about financial issues or seeking professional advice in the next year. Many participants report that they did not receive financial education at home or at school to help prepare them; responses of learning “not too much” or “nothing at all” about financial issues totaled 55% at school and 35% at home. Yet, 64% of these people have never received professional advice about financial issues from an individual or an organization. The study finds that most people seek the advice of family members and friends. Of those that sought professional advice, only 5% went to a credit union.
As consumers, it is fairly easy to convince ourselves to spend money on things we want but don’t really need. On the other hand, it is really hard to spend time and effort on things we know we need but do not really want, like financial education. Links to the research: http://www.networksfinancialinstitute.org/Finance/facts-figures/Pages/default.aspx http://www.nfcc.org/NFCC_SummaryReport_ToplineFinal.pdf
Keywords: financial education