Financial health and wellness shouldn’t be reserved for any one group of people. The TCUL believes that each Tennessean deserves access to high-quality financial services and financial education to meet their needs. Tennessee credit unions work daily with their members to find solutions to meet their members’ financial goals. Our members know they can count on their credit union to help them fulfill their financial dreams.
What does Financial Health actually mean? For many decades, financial health referred to financial literacy or an individual or family having upward mobility, that is, rising from one financial class to the next, the American Dream. However, more recent studies1 show that most Americans wish to have stability more so than mobility. Income volatility is a prevalent issue across socio-economic statuses, it is not limited to only low-income earners or people lacking traditional financial services. In fact, the JPMorgan Chase Institute, conducted a study2 of Chase customers who regularly deposited funds across their checking, savings, auto loan, credit cards, and mortgages to gauge how stable each account was. These customers would not normally be considered low-income earners given the amounts deposited, but the researchers found over half of the randomly selected customers had a swing of 30 percent in their monthly income deposits. This could mean one month, all bills can be paid on time with money left over to save or spend, while the next month, bills go unpaid, fees pile up, and savings are drained. It’s no wonder, majority of Americans want stability, even if that means sacrificing a potentially higher income.
At its core, financial well-being has four main principles: Control, Capacity, Choice, and Goals.
- Control refers to the ability to manage day-to-day and month-to-month finances.
- Capacity is the ability to absorb a financial shock or unexpected debt.
- Choice is the financial freedom to decide what to spend money on and enjoy life.
- Goals are short or long term financial aspirations.
The Financial Health Network estimates that 167 million Americans are financially unhealthy. Low-income communities, people of colors, and rural populations are more likely to struggle with their financial health than the total populations. Often times, those truly struggling with income instability view predatory lenders as their only choice to make ends meet, but this unfortunately ends in a vicious cycle of taking out extremely high-interest loans. These types of lenders have a large presence in Tennessee and typically prey upon lower-income communities, further exasperating financial distress.
However, TCUL has a plan to better TN communities, which includes ensuring their members are financially healthy. Many credit unions across the state offer a variety of personalized counseling, education classes, and products that help members understand their unique financial situation and create a plan to attain their goals. Watch this story from Southern Security FCU and hear how they worked with a member to better their financial well-being, one of many credit union examples.
1Morduch, Jonathan, and Rachel Schneider. The Financial Diaries How American Families Cope in a World of Uncertainty. Princeton University Press, 2019.
2Farrell, Diana, and Fiona Greig. Paychecks, Paydays and the Online Platform Economy. JPMorgan Chase Institute, 2016.
The Tennessee Credit Union League was formed in 1934 as a 501 (c) (6) non-profit trade association for Tennessee credit unions. It is the mission of the League to promote and support the success and advancement of credit unions in meeting their service and structural goals.