Thursday, April 24, 2014
MICHIGAN SCHOOLS AND GOVERNMENT CREDIT UNION AND WALSH COLLEGE
Michigan Schools and Government Credit Union (MSGCU) and Walsh College have found that a large percentage of residents of Oakland and Macomb counties are dissatisfied with their financial situation, despite enjoying above-average median household incomes and higher levels of education than the state and national averages.
The findings come from the State of Financial Knowledge, a detailed study by Walsh College, commissioned by MSGCU, which gauges the level of financial awareness and financial satisfaction in Oakland and Macomb counties.
Residents of the two counties with a lower level of understanding of basic financial knowledge had elevated levels of stress, reported Linda Wiechowski, Ph.D., professor, Finance and Economics, Milena Thomas, adjunct assistant professor, Finance, and Terri Washburn, Ph.D., professor, Business Information Technology, co-authors of the study. In addition, respondents often believe they lack important financial knowledge and are uncertain what to do in order to address financial concerns.
The survey is the first collaboration between the two organizations. It was designed to provide insight beyond what could be extrapolated from national data into the communities served by MSGCU, particularly as those communities have sustained financial strain for an extended period of time.
Among the study findings:
- 35 percent of participants reported being "somewhat" to "completely dissatisfied" with their financial situation. Women report feeling less satisfied with 40 percent “somewhat” or “completely” dissatisfied, in contrast with men, at only 29 percent for the same feelings.
- Cash flow and servicing debt was an area of concern with 39 percent of respondents reporting that they spend at least half of their take-home pay on debt, such as mortgage, home equity, and car loans or leases. Of these, 48 percent reported experiencing stress "often" or "constantly." (New Consumer Financial Protection Bureau guidelines suggest borrowers’ debt should make up 43 percent or less of their gross income.)
- Perception of financial competency (whether perceived or actual) appears to affect one’s level of stress. Only 16 percent of those who reported their perceived financial knowledge score as “excellent” reported they experienced stress about their personal financial situation on an “often” or constant basis. As perceived knowledge decreases, the percentage of those experiencing stress at an “often” of “constant” basis increases significantly.
- Those that had some financial training through workshops, a related degree, or were self-educated in financial matters were more satisfied with their personal household financial situation and had a higher knowledge score.
- Saving for retirement and feeling that the future for a comfortable retirement is likely reduces both the frequency and level of stress.
As a result of the survey, MSGCU is announcing its “Financial Wellness Initiative."
"While April is Financial Literacy Month, we believe financial knowledge is important every day of the year," Pete Gates, MSGCU President and CEO, said. "In response to what we have learned in this study, we are going beyond the month of literacy and announcing a Financial Wellness Initiative to provide financial education and support to our members and to the community at large. We want to empower people to be proactive about seeking assistance with their financial situations and making better decisions – both actions that are hampered by a lack of financial knowledge and financial self-confidence."
Financial Wellness Initiative components will include public programs and special events designed to increase financial knowledge, build self-confidence while making financial decisions, and raise awareness of new resources for financial information and guidance. Activities will also include opportunities to meet in-person with MSGCU financial advisors to learn about debt management and to better understand credit report information.
CEO Pete Gates continues, "We have always provided financial education to our members and the community. It's what distinguishes us from other financial institutions. The results of this survey are a call to action about the need for even more support.”
As part of its Financial Wellness Initiative, MSGCU will introduce enhanced ways to access information online, via online chats with financial experts, and through informative videos. Educational materials will be made available 24/7 for the convenience of those who may be pressed for time, such as students and working female heads of households.
All activities will be free of charge and open to MSGCU members and to the general public. Events will be hosted throughout the communities of Oakland and Macomb counties at MSGCU branches, as well as additional locations. Check often for updates at www.Msgcu.org/workshops.