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Promote Financial Literacy & Resiliency for a Better Life

Posted July 28, 2022

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How can co-ops ensure that they have a real positive impact in the lives of members? One way is through “5-15-20-60”. It’s not a complicated code but a way of life. Lasalette Gumban, who heads the Diaspora Program, tells us how and why.

Co-ops exist to Build the wealth of our members and in the process build the wealth of the community.

The Organisation of Economic Co-operation and Development (OECD) defines Financial Literacy as  “Knowledge and Understanding of financial concepts and risks as well as skills and attitudes to apply such knowledge and understanding in order to make effective decisions across a range of financial contexts to improve the financial well-being of individuals and society and to enable participation in economic life.” (https://www.oecd.org/finance/financial-education/measuringfinancialliteracy.htm)

Financial Literacy is more than just savings.  It is about living a full life!

The original goals of co-operatives was toward Thrift, Savings, Wise Use of Credit, and thus improving our quality of life.  These all relate to each other.

If we look back at the history of co-operatives, when the Rochdale Pioneers established the first formal co-op, and when Financial Literacy was still an unknown term, co-ops were already doing financial literacy sessions!  This is because the co-ops’ original goals.  The original goals of co-operatives was toward Thrift, Savings, Wise Use of Money, and thus improving the quality of life of members – social, cultural and even spiritual.

Components of Financial Literacy:

Earning – How do we encourage members to have varied income streams and have more income?  Teach them to be entrepreneurs!

Saving – How do we increase patronage?  Education!  We always here the pioneer co-op leaders narrating how they struggled long ago to grow the co-op.  

And we should encourage the young people to save in the co-op and have future leaders.

You can set concrete targets in your Asset structure where 55 to 65% of the assets of a co-op comes from deposits of your members.

Spending – Budgeting and living a simple and sustainable lifestyle should be urged among members.  The “5-15-20-60 Budgeting Formula” is simple: 5% of income goes to insurance, 15% goes to savings, 20% goes to investment, and only 60% is actually spent.

Does your co-op teach members how to budget?

A simple life is a happy life!  Financial literacy is a values formation intervention.

Credit Management – One must understand what is “good” or “bad” debt, and the wise use of credit.  Co-ops should provide loans towards guiding borrowers to be entrepreneurs!

Protecting – Insurance is a part of life’s necessities.  Every co-op should be a member of an insurance cooperative and provide protection to members.

Without Protection, the Financial Literacy experience is not complete.

This ultimately leads to Financial Resilience – the ability of a person or an organization to cope with and overcome calamities and crisis.

The elements of Financial Resiliency are a member’s 1) Emergency Fund of up to 9 months, 2) use of debt for productive purpose, 3) various income streams, 4) various strategic investments, and 5) Health and Life insurance.

Ultimately, the measure of a co-op’s success is seen in the lives of their members. 

The elements of Financial Resiliency are a member’s 1) Emergency Fund of up to 9 months, 2) use of debt for productive purpose, 3) various income streams, 4) various strategic investments, and 5) Health and Life insurance.

Ultimately, the measure of a co-op’s success is seen in the lives of their members.

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  • financial literacy
  • national confederation of cooperatives

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