Getting social to improve Gen Z and Millennial financial literacy
There are many instances in life where it’s OK to learn from making mistakes, but – speaking from experience – credit and personal finance are not times you want to do that if it can be avoided. In fact, the importance of understanding credit and personal finance in today’s fast-paced financial landscape cannot be overstated. This knowledge is paramount for financial well-being.
As a financial services community, we have a responsibility to consumers who are looking to expand their understanding of important financial topics and improve their financial health. Yet, recent research shows personal finance knowledge gaps are leading to costly missteps for many Americans. In fact, a staggering three in five adults attribute their financial mistakes to a limited understanding of credit and personal finance.
This trend is particularly pronounced among younger generations, with Gen Zers and Millennials bearing the brunt of these errors. Among Gen Zers and Millennials, 71% and 70%, respectively, say their lack of knowledge about credit and personal finance has led to costly mistakes, with nearly a third of Gen Zers and over a third of Millennials reporting losses of $5,000 or more.
This reality underscores the need for enhanced financial education, particularly for younger consumers, and presents a distinct opportunity for credit unions to strengthen their position as a trusted resource for members while helping improve consumer financial health.
Meeting members where they are
Experian’s research highlights the evolving landscape of financial education dissemination and consumers’ appetite for improved financial knowledge, with two-thirds of adults reporting they’d like to expand their knowledge of credit and personal finance. But for credit unions to make a tangible impact in improving financial literacy, they must meet consumers where they are and deliver information in a way they want to receive it.
While older generations (Generation X and above) were most likely to report learning about credit and personal finance from a parent or family member, younger generations are taking a different route. According to Statistica.com, the average consumer spends 143 minutes per day on social media. With this in mind, perhaps not surprisingly, members of the Gen Z and Millennial generations most frequently turn to social media to improve their financial literacy. These consumers regularly leverage platforms, including YouTube (30% Gen Z; 31% Millennials), TikTok (20% Gen Z; 15% Millennials) and Instagram (18% Gen Z, 16% Millennials).
Recognizing this trend, credit unions have an opportunity to leverage social media as avenues for engaging with younger members and disseminating relevant financial education content.
Here are four example benefits integrating social media as part of your member education strategy can provide:
1. Combat financial misinformation: by actively promoting financial literacy resources and tools developed or endorsed by reputable organizations, such as government agencies, financial institutions, or non-profit organizations, credit unions can steer members towards reliable sources of information and away from potentially misleading content.
2. Support long-term financial stability: amplifying educational content on social media can inspire positive financial behaviors among members, such as budgeting, saving, and responsible borrowing, with lasting benefits. By offering practical tips and insights, credit unions can empower members to make informed financial decisions that lead to long-term financial stability.
3. Foster deeper member relationships: social media platforms facilitate two-way communication, allowing credit unions to gather feedback from members, address their questions and concerns, and tailor future content to their needs and preferences. This fosters a dynamic relationship between credit unions and their members, based on mutual trust and collaboration which can ultimately enhance member loyalty.
4. Contribute to a more stable and resilient financial ecosystem: the benefits of focusing on financial literacy extend beyond individual empowerment and organizational growth—they spread to society as a whole. By helping members build strong financial foundations, credit unions can help consumers avoid costly financial mistakes and potentially mitigate risks associated with delinquencies and defaults, ultimately contributing to a more stable and resilient financial ecosystem. When consumers are financially empowered, they are more likely to achieve long-term financial stability, contribute to economic growth, and participate actively in their communities.
Ultimately, the result of sharing resources on social media as part of a robust financial literacy program is a more educated member base. And this leads to improved financial habits, setting members up for success as they plan for bigger investments such as renting an apartment, purchasing a new car or buying their first home.
Navigating the mainstream financial system has its complexities, and if consumers don’t have a baseline understanding, it can be overwhelming. By prioritizing consumer education, credit unions can serve as catalysts for financial empowerment and resilience, thereby safeguarding the financial health of their members.
About Author:
Christina Roman is Experian’s consumer education and advocacy manager. She is also a Millennial.