Financial education is like sex education. What you do not know can and will hurt you. Over the last several weeks, many Americans have learned the importance of financial literacy from reading about Mitt Romney’s tax returns.
Romney, who is obviously very financially literate, has shown that if you have a team of crafty economic advisers, set up offshore accounts, store money in Switzerland and get paid in capital gains rather than wages, you can cut your tax rate in half. Last year, Romney paid only 13.9 percent in taxes, while most of you reading this paper probably paid more than that percentage. In fact, even Romney’s political opponents paid more: President Barack Obama paid 26.3 percent, and Newt Gingrich paid 31.7 percent in income taxes.
You may wonder how something so unfair and unpatriotic can be legal. Simple. It’s legal because the hedge-fund groupies that Romney hangs around with write the laws.
But financial education should not be confined to the rich and powerful. It should be available for everybody. We at the News & Review have been helping to provide financial education for the other, dare I say, 99 percent.
This started last year, when my good friend Mary Hogarty, a community-relations manager for Citibank, saw the eight-page publications we had created for the Salvation Army and the Sacramento Food Bank & Family Services. She asked if we could produce a publication on financial literacy for Citibank. We said, “Sure!”
As well as inserting the Citibank Money Matters publication in each copy of the SN&R, we printed an extra 30,000 copies, which were distributed by local nonprofits. The issue included information about earned-income-tax credits, how to cheaply file your income tax, why to avoid check-cashing places and stories on local nonprofits. The publication was a huge success. The local nonprofits had many more people attending their financial workshops, and they continued to distribute the publication year-round.
This year, Citibank asked us to produce a similar piece nationwide, with local information customized for each state. This year’s the Money Matters publication is being produced both in English and in Spanish, and there have been nearly 2 million copies printed. It will also be available online. That is a lot of financial education.
This brings me to my point about the importance of financial literacy. It’s a dangerous world out there when it comes to finances—especially if your last name isn’t Romney. You need to avoid bad home loans, predatory interest charges and massive overdraft charges, among other things. Just as the sex-education counselors told you over and over, do not go out without protection. And financial education is the most important form of protection.