Last week, Iona was delighted to speak to the Association of British Credit Unions at their annual conference in Glasgow. She was asked to speak on the subject of young people and how credit unions can help them today. Here is what she had to say…
Firstly, I would like to thank ABCUL for inviting me to speak today at your conference because having the young perspective, and thus acknowledging the young consumer, is half the battle won in terms of getting millennials to realise that credit unions could be the answer to many of their financial problems. It is a huge step forward not just for credit unions but for society as a whole to be proactively helping young people, who tend to be exploited or just ignored by the financial mainstream.
Let’s just remind ourselves why we need to be helping young people…we have seen the dangers of ignoring the young pound for too long. Payday lenders proactively targeted young workers who were disorganised with their finances and flourished prior to the price cap wisely introduced by the FCA last year. There has been a huge amount of coverage about the worrying lengths that payday lenders will go to just to attract a young demographic. For instance, what about payday lenders who pay up to £50 for referrals from brokers, many of whom are based abroad and appear in search results for, say, “student payday loans”?
The fact is that payday lenders, like banks, have quickly grasped onto the fact that you need to get ‘em young. The consequences of becoming semi-reliant on high-cost credit, all because of a knowledge deficit at a crucial age when you are short of cash, are obviously devastating for individuals and society as a whole. Indeed, a third of young people say they have debts of over £3000, according to the Money Advice Trust, with many of them saying the toll of debt weighs heavily on their minds.
A friend of mine, an intelligent & responsible 28 year old senior manager, says she stays awake at night thinking about how to pay back two high cost credit cards she took out when she first moved to a new city. Impulsive financial decisions made at a young age can cause regret and anxiety for many years after, unfairly affecting young people’s long-term prosperity AND mental health. Also, think of the Daily Telegraph columnist who recently tweeted me to say she has never felt on top of her finances, having reached the age of 25 and seemingly held down a very responsible job in the process. The reason? Managing money well is “hard”. These two case studies I’ve just mentioned are not unique, and it is one reason why I wrote my book, in a desperate bid to show that young people are NOT necessarily destined for excessive debt and that while managing money takes a bit of effort, being on top of it is far better than not being on top of it.
I wanted to make it an aspirational issue, in fact, and I did that by talking about savviness being an empowered, ethical lifestyle choice. Having inspirational quotes throughout, funny anecdotes, gorgeous pictures…when we see all these picture-perfect Instagram stars showing off their healthy meals, exercise regimes and life-enhancing literature on their bedside tables, it’s clear that this generation is aiming for higher things despite the financial problems it faces.
Surely they can be persuaded that managing money well is part and parcel of a life well-lived?
On a more positive note, this must mean that there is definitely a good financial incentive on the part of credit unions to help young people, because many of us DO have a disposable income; not all our money is going on rent and travel costs. Sadly, credit unions and other institutions who have good intentions have some way to go in persuading millennials to put whatever money they can into saving with a credit union rather than spending it on bottomless brunches and Lululemon yoga pants.
However, I do not see why credit unions can’t get through to us at a young age and should they succeed, they have a chance of attracting a good chuck of money set to come our way thanks to baby-boomers passing some of their wealth onto the next generation. Think of the social good that credit unions could do for its less fortunate members if they can attract young clients, helping them when they need it the most and hopefully being repaid later on – bigtime. The definition of enlightened self-interest, one might say…because let’s face it, most consumers are (sadly) apathetic and unthinking when it comes to their finances. Why can’t we harness that in a positive direction and attract potential lifelong clients of credit unions at a young age?
So this brings me onto some initial conclusions that the credit union sector can hopefully use; one is the obvious need to use technology to reach young people but setting up a blog, appearing on Twitter and Facebook… it’s only the start. It’s about what you do with those accounts that will make the real difference. Ideally credit unions could be working with already established bloggers, websites and journalists in the young money space to develop campaigns and provide resources that will back up the work they do in schools, colleges, universities and the workplace. Because credit unions have to attract that initial audience by piggy-backing on the more obvious, mainstream sources of information for young people and then, they have a chance of continually engaging their members through genuinely original content. Taking a lead on young people’s issues through public policy work, not being afraid to voice an opinion about government policy and economic issues so credit unions are right at the forefront of our national debate about helping young people…that would really help to boost their credibility as well.
We need to understand the pressure points when young people are likely to go online and look for advice about money, and understand the search engine optimisation key words that are most commonly used by young people in financial difficulty.
What I think is most likely to be neglected in the push for young clients is face-to-face interaction. What I’ve been most surprised by is how much young people still rely on advice provided by family members, and how so many would go to a financial adviser if they could afford it. What credit unions can do, within the regulatory confines of “guidance” of course, is provide the solid, common sense advice for young people that ideally would be supplied by every parent (if possible). Credit unions could also act as a perfectly viable alternative to expensive financial advice because young people’s needs normally are very basic but important and universal; the need to budget, save, recognise good value and build up a solid credit rating. Credit unions already provide the key products that allow young people to do all those things but what’s missing at the moment is the information that tells young people that those are the things they need to make life a bit easier.
Guess what? All the financial help we really need is here in an ethical, community-based one-stop shop. I want to know that I can go to a credit union when I need to talk to someone about the basics of money but I also need to be able to go online if I’m really stuck and need emergency credit that would cost so much more elsewhere. I know I can go to the credit union will provide me with the fair loan I need but then, it will nudge me into saving money for the future, thus preventing me from borrowing unnecessarily in the future.
Being present in schools, the workplace, colleges, universities…this is work already being done by credit unions and things are getting better all the time. But we need to reinforce the presence of credit unions in our education system, make them as much of an acceptable mainstream option as banks, and then continue to talk young people at key points in their life – when they leave school, college, care, home and/or university – about ways to manage their money in adult life, giving them a website with resources and advice they can trust, and the promise that if they need someone to help them with their finances in the future, credit unions will always be there for them.