Savings Accelerator: “I wish I wouldn’t have saved so much…” – said no one ever

Statistics are splashed across headlines everywhere: Americans need to save more. And when you ask those who do not make saving money a priority, they use words like “daunting” and “intimidating” to explain why they have not yet begun.

A recent consumer survey asked individuals 25-34 years of age if they were satisfied with the amount of money that they save each month, and 74% answered with an overwhelming “no.” When asked whether they would choose to start or build savings if their financial institution offered an automatic savings plan tied to their auto loan, nearly 53% answered “yes.”

These facts alone demonstrate that our members deserve trusted financial experts like us to deliver and expound on the concept of habitual savings, and to challenge consumers to treat saving like a budgetary obligation, just like their car payment. That is where the credit union movement comes into play. Affinity Plus knows that there is an opportunity to challenge members to save more, but we want to give back to members as a reward for saving, since saving certainly is not easy – and many times not fun. We want members to be devoted to saving, and to practice it regularly.

Savings Accelerator Program

In June 2016, Affinity Plus launched a program called Savings Accelerator, and here’s how it works. You, as a member, have the option to add this feature to your auto loan to help you save more effortlessly. We get you signed up, you deposit an amount equivalent to your monthly car payment in your new savings account in month one, then $15 each month thereafter. You earn a higher interest rate on the savings (1.0% APY), a reduced rate on the auto loan (dependent on your credit score), and you have a heap of money saved up when you pay off your car ($1,200 on average). To put it into three words: WIN – WIN – WIN.

Our field of membership at Affinity Plus is a diverse group, from Minnesota state employees, to students and alumnus of Minnesota universities, and although our members may all be experiencing different life events and milestones at various times of their lives, one concept remains essential - we all can save more.

As of 7/31/2016, Affinity Plus has originated just over $1 million auto loans with this feature, and these 71 members have already set aside over $19,900 in the savings account tied to their auto loan. Additionally, because of the reduction in rate from enrolling in the program, these members have saved more than $7,700 in interest on their loans!

We want to foster a vision beyond today’s chaotic schedules to a point in life where we are financially free to live the lives that we dream of. But this takes sacrifice and self-motivation, and we get that. We strive to empower individuals of all ages to initiate financial independence.

So what happens after the auto loan is paid off? This is the next stage of the journey that we need to make sure we get right, and it’s the most exciting part. Now that individuals have learned how to save, it is critical to help them identify their goals and dreams in life, and initiate a plan to achieve them. When I joined the credit union movement, one of the first books I was given was The Dream Manager by Matthew Kelly, and this impacted how I advised members on setting goals. I know the advice in this book will be a powerful source in the creation of the next step of the Savings Accelerator journey. This book shows how meaningful and motivating it is to help fulfill employees’ dreams, and it can be mirrored in the same light within our members’ lives by applauding them for their hard work to accumulate savings through the Savings Accelerator program.

My wish would be to have each member sit down with a trusted financial expert at Affinity Plus to start a “dream plan” where together they can map out a plan to achieve a goal in life that he or she now has the ability to accomplish, because they were committed to saving.

“A dream written down with a date becomes a goal. A goal broken down into steps becomes a plan. A plan backed by action makes your dreams come true.” –Greg S. Reid

Nicole Haverly