12 Financial Tips Loan Officers Must Share with Members

Loan officers should strive to be more than form pushers and evolve to be viewed as members' financial advisors. When you have a loan origination system that provides a holistic view of your members' financial data, you are more apt to position yourself as an advisor, increasing the opportunities to provide additional member services. Here are 12 tips to give members that will help put them into a better financial position:

Set Realistic Budgets. Budgeting is a great way to establish benchmarks for spending and saving. But, they aren't going to be useful if they're set in a vacuum. Don't forget to include emergency savings accounts, savings plans - both short and long term - for vacations, college funds, home purchases, and retirement.
Track Your Budget. Budgets help members live within their means, but they can be difficult and time consuming to track. Maintaining a record of cash flow in a home is complex and detail oriented. This is where most of your best-laid plans go off the rails. Help members by introducing them to websites, software, and mobile apps that are designed to help with budgeting, such as mint.com or other Personal Financial Management (PFM) tools.
Set SMART Goals. The best, and most successful, goals are SMART goals - Specific (save money for vacation) Measurable ($1,000 total) Attainable (setting aside $100 per month) Realistic (if you have a car payment, mortgage, and student loans, $100 per month may be way too high) Timely (by the end of next year). Encourage members to use numbers and dates, not just words, on saving and spending goals.
Create a Financial Calendar. For members who forget to pay quarterly taxes or periodically pull a credit report, encourage them to set calendar reminders in their smartphones or planners for all their important money related to-dos.
Watch Your Credit Score. A credit score is one determining factor into whether your members will qualify for the loans your CU has to offer. It also has an impact on other areas of their lives. Be sure to stress the importance of making timely payments and to know to stay within 30-50% of any given available credit line. Direct them to the credit reporting institutions to check their score annually, like Experian, TransUnion, and Equifax. It costs nothing but can save you major headaches later.
Make Sure Your Credit Score is Accurate. Since credit scores make a significant difference in interest rates, members should make sure that their credit score is accurately monitored with the 3 credit bureaus. If the member finds inconsistencies or mistakes, they should be addressed or they will follow the individual throughout their life.
Watch Your Interest Rates. If your credit union lending software gives you a 360-degree view of your member data, you should be able to see where they are carrying balances and where they are saving their money. Review the information with them to ensure the balances with the highest rates are paid off first, and the accounts with the best rates for savings are where the appropriate amount of their money is located.
Consolidate Your Credit Card. If a member is paying substantially high-interest rates on credit cards, suggest consolidating their card balances to a lower interest loan option. Loan officers should be able to see a view of their accounts within your core software, and that view should include credit cards with your credit union to able to recognize the need for these loans.
Consider Paying off Small Debts First. Researchers found that when facing a mountain of debt, paying off the smaller bills first greatly increased a borrower’s chances of paying their debt in full.
Contribute to Your 401K. Nobody wants to leave free money on the table. Be sure to stress the importance of contributing to their company's retirement plan and at a minimum, take advantage of the maximum employer match.
Invest Using Roth IRA's. Roth IRA's allow you to pay the tax upfront to minimize the tax bite at retirement. These are a great place to save for retirement yet still have available for emergencies since they can be withdrawn from tax-free after 5 years and age 59 1/2.
HELOC. Suggesting a Home Equity Line of Credit as an emergency access to funds or to pay for home improvement projects can go a long way with members. This is a much better option than most credit cards, strictly because of the lower interest rate (not to mention a typically larger credit limit).

Advising your members on smart investing and spending is a win-win. Your members gain valuable insight and learn how to better manage their money. Your credit union experiences fewer defaults with savvier members, as well as creating more cash flow for investing into loans you offer through your credit union lending solution.