We will be working with our software partner to develop Financial Health Indicators (FHIs).
Covering spending, borrowing and saving, FHIs will be shared with the Credit Union’s borrowers. The indicators will be used to let applicants know how to improve their financial wellbeing which will also increase the chances of getting a loan.
What is financial wellbeing?
Financial wellbeing means feeling secure because you have enough money to meet your needs. That’s needs, not wants. Fast cards and Caribbean holidays might have to wait. Financial wellbeing is about being in control of your day-to-day finances. Having the financial freedom to make choices that allow you to enjoy life is important.
Here are four steps to improve financial wellbeing
1. Write down your budget
Knowing your essential expenditure and disposable income gives confidence in your decisions. The 50/30/20 rule helps. After paying tax you split what you have left into the three different categories: essentials (needs: 50%), flexible spending (wants: 30%) and financial goals (plans: 20%).
2. Don’t use credit for everyday expenses
9 million adults often use a credit card, overdraft or borrow money to buy food or pay bills because they’re short of money.
Avoid using credit cards to pay for essential ‘needs’. It can be difficult when times are tough and money is short. For this reason, we produce regular money tips. Helping members make the most out of their money, the tips are sent to your inbox and published on our website monthly.
3. Start saving
11.5 million UK adults-that’s 22% of us -have less than £100 in savings. Everyone who borrows from the Credit Union has to save as they repay their loan. Despite living in one of the poorest areas in the country our members have amassed nearly £9m in savings.
To encourage our members to save more, we’ve launched a Credit Union Prize Saver Account. It’s the savings account with monthly prizes of up to £5,000.
We’ve long been aware of the contrast where people on limited incomes buy lottery tickets but don’t manage to save for future needs. Despite the chances of winning the lottery being so remote, people keep playing.
Prize linked savings are an alternative to lotteries, with one key feature; a lottery loss means losing money. Not winning on a prize linked savings account doesn’t cost a penny. All money deposited remains untouched.
Want a Christmas present idea? Contact us about our Prize Saver gift voucher.
4. Speak to others about money
A problem aired is a problem shared. Everyone has money worries at some time in their life. A cross generations perspective often helps. We’ve published tips on talking to children and young adults about money as well as talking about money if you are a couple.