HomeLet's be real: Money isn't just math. It's also emotion.
That's why traditional budgeting advice often falls flat. We talk spreadsheets or financial wellness apps before we talk stress, and we miss the bigger picture: people don't just need plans. They need plans that feel doable, especially when life gets chaotic.
In today's financial climate, clarity is currency. Whether you're recommending members build emergency funds or reviewing your own quarterly spend, it's not just about where the money goes. It's about why it moves in the first place.
Old-school budgeting focused on what to cut. Today's best strategies focus on what to build. Instead of asking "What should I stop spending on?" we ask "What do I want this money to help me do?"
Buy Now, Pay Later tools and food delivery platforms aren't just about convenience; they tap into emotional fatigue. Members aren't financing burritos because they're careless; they're doing it because they're tired and craving ease.
Recent research from McKinsey & Company indicates a growing mismatch between how consumers feel and how they spend. Despite nearly half of Americans expressing optimism about the economy, most are pulling back on discretionary spending, according to The State of the US Consumer 2025 published in February 2025. Gen Z and Millennials, in particular, are responding with what's been dubbed doom spending, emotionally driven purchases fueled by stress, uncertainty, and financial defeatism, as highlighted in Mind the Gap: Why Is Gen Z Doom Spending? from December 2024.
"We want to help people build plans they're excited about, not ashamed of," shares Audrey Olzem, SVP of Marketing Solutions, CUSG, "That means approaching the relationship with empathy."
This insight is key for financial institutions. If members are reacting to anxiety rather than logic, then guidance needs to speak to that reality. Financial empowerment should be grounded in empathy, not just structure.
Business and personal budgets seem different, but they share core principles:
Financial planning is human. Behind every decision is a feeling of fear, hope, doubt, or relief.
Across sectors, many are revisiting their spending strategies. Seventy-five percent of consumers reported trading down in the first quarter of 2025 to manage food and retail costs. Even high-income households made more economical choices.
This behavior maps closely to small business and credit union budgeting. When uncertainty rises, leaders focus on control. But control without flexibility can block growth. Just like consumers, credit union teams need budgeting processes that allow for experimentation and value-driven investment.
For example, many institutions are rethinking how they allocate funds to technology and digital engagement. Instead of trimming these budgets, they're shifting toward solutions that help them understand and anticipate member needs especially through analytics and feedback tools.
A core challenge in financial wellness is helping people turn good intentions into lasting behaviors. One effective approach is using small rewards to reinforce consistent action.
Prize-linked savings programs offer one example. Programs like Save to Win have shown how gamified incentives can make saving feel less like a sacrifice and more like progress. For every $25 deposited, members receive entries into drawings for cash prizes. This simple mechanism turns delayed gratification into more immediate rewards.
According to CUSG data:
"We've seen members go from saving nothing to building real financial cushions just by making small, consistent deposits" shares Hannan Esmail, Save to Win Program Manager. "Save to Win meets people where they are and turns saving into something they actually want to do."
Rather than pushing for perfection, the program rewards momentum. Especially for younger or financially vulnerable members. This approach can jumpstart more resilient financial habits without relying on shame or fear. It reframes saving as an action that feels exciting, not burdensome.
In the recent MemberXP Mood and Money webinar, one message stood out: Members who feel emotionally connected to their credit union have dramatically higher lifetime value.
Emotional connection isn't something that happens overnight. It requires consistent, intentional action, which includes asking better questions, closing the feedback loop, and showing members that their financial struggles are understood, not judged.
Feelings are forward-looking. Emotional context is the missing link in most financial strategies, and it's what builds real loyalty.
Traditional AI and analytics can flag behavior patterns, but they can't always explain the why. Two people might miss a loan payment. One feels ashamed; the other feels dismissed. Each needs a different response from the financial institution.
That's why CUSG advocates a dual approach: combine insight-driven tools like MemberXP with frontline staff training that centers empathy.
Emotional spending isn't just a Gen Z problem, though members of that generation are often in the spotlight. In fact, Gen Zers are among the most likely to engage in "doom spending," often driven by financial pessimism and social media influence.
But they're also value-driven. When they spend, they prioritize purchases that align with their values or offer real benefits. This creates an opportunity for credit unions to position themselves as allies not enforcers.
To meet these members where they are, institutions need tools that:
When budgeting tools and products are built with these principles in mind, emotional spending becomes a conversation starter not a red flag.
To move from awareness to action, credit unions can:
These actions aren't just good service. They're good strategy. They foster deeper trust, higher engagement, and more resilient financial habits.