Credit Guard: teaching financial literacy when the stakes are low
By Michelle Leung, Niam Shah, Nina Eibock, Filip Kolansinski, & Olivia Hampsher-Monk
Executive Summary
How can we bring forward the moment when students feel they must learn personal financial skills? How can we incentivize learning and put those skills into practice before individuals start their careers, start managing bills and start weighing up short-term vs. long-term financial decisions? How can we help student-athletes learn despite their time-pressed schedule? And how can we make the most of student-athletes’ focus and dedication, their discipline, and their competition?
The Problem
“Resources about personal finance are not easily accessible, or there is too much time commitment.”
“I don’t feel fully prepared to enter adult financial life.”
“You don’t need to learn until you’ve messed up your credit score, and then it’s too late.”
The above are just a few examples of the challenges we heard student-athletes express in our research interviews. Students often arrive at university having had few conversations about finances. In an environment centered on learning and setting oneself up for a successful future, financial education is neglected. Many students we spoke to said they recognized they should improve their financial literacy, but felt unprepared for the next step. They expressed difficulty in finding the motivation to learn personal financial management skills and to narrow down resources to use.
This problem is exacerbated for student-athletes who have limited free time to learn outside the classroom or earn alongside their busy schedules.
So how can we bring forward the moment when students feel they must learn personal financial skills? How can we incentivize learning and put those skills into practice before individuals start their careers, start managing bills and start weighing up short-term vs. long-term financial decisions? How can we help student-athletes learn despite their time-pressed schedule? And how can we make the most of student-athletes’ focus and dedication, their discipline, and their competition?
Introducing Credit Guard
Credit Guard is a credit card account that would be offered by a credit union (rather than being a stand-alone app). It is a ‘reward learning’ system where students and student-athletes earn a higher credit ‘ceiling’ by achieving personal financial goals and by completing small financial literacy learning modules. This credit ceiling is within their credit limit but is very receptive and is revised on a weekly or fortnightly basis. Students can use their athletics stipend/fellowship as income on the account and/or parents can under-write credit which can only be used within such an account setup (if they wish to start students on this before university).
Connecting to the user’s existing savings account, to provide on-the-spot savings when you decide not to spend money, i.e. "impulsive savings.”
Quizzes to measure uptake of course content.
Personalized insights, inspired by Spotify’s yearly wrap-up, with weekly summaries that offer insights into spending habits and help users design new personal goals. The goal is to frame day-to-day savings in a long-term way, so students learn the benefits of small lifestyle changes.
Audio content allows athletes to listen to lessons when dashing between classes and the gym.
Financial Q&A section.
What’s in it for Credit Unions?
This account offers benefits to financial institutions. Whilst they initially have to invest resources into students (including by training specialist tellers to support goal setting), there is a return on investment, as such an account builds trust between the student and the credit union and makes them more likely to stay with the institution post-graduation.
Optional: customizing the type and regularity of notifications to suit individual users.
Optional: double transaction costs and invest money in savings (your $5 coffee becomes $10).
Optional: productivity extensions can be activated when you have spent over 10 minutes on social media to remind you to do your learning content.
Optional: team competitions for additional motivation. e.g. the credit union giving rewards to the sport who learned the most content in any academic year or matching savings up to a cap.
This account will also provide the credit union with a better understanding of their user’s financial education, which is valuable when judging who to lend to for what rates. This aligns the incentives of the financial institution and the student.
Marketing
A key marketing direction is to target parents to help target and onboard incoming students. We heard from interviewees that they had adopted their parent’s financial attitudes - this tool provides a route for parents to ensure their child learns even more than they are able to teach them. Additionally, the marketing for such a product can focus strongly on the university experience and how this tool fills a clear gap in your educational preparation for a successful and prosperous future. Another potential marketing tactic would be to use student-athletes as representatives through NIL deals.
Outcome
Credit Guard is designed to switch reactive financial literacy into proactive financial literacy by increasing incentives to learn whilst creating a controlled and safe environment in which to test new skills. It takes financial literacy from the abstract and makes lessons immediately applicable. It addresses the high drop-off rates in financial literacy app engagement by incorporating learning into a pre-existing system. With Credit Guard students learn how to maintain a good credit score and use credit for their benefit, which we heard from financial institutions was the most important lesson. It teaches students to adapt their lifestyles to meet long-term goals and savings targets. It gives users the tools to manage their finances, reducing financial stress in the short and long term.
In June 2023, the Redesigning Finance students presented their work to a panel of experts working in the finance and student athletics sector.
