I have never considered myself to be a financial aficionado, but I was recently confronted with the depths of my ineptitude after a protracted tangle with the New York State Tax Department. In order to work a summer job scooping ice cream – seemingly the most carefree of professions – I had to become licensed to collect sales tax, but after the job ended and the months turned cold, I completely put it out of my mind that I was supposed to be “quarterly filing for zero.” A few notices were mailed to me, but I tended to glance at them only vaguely, feeling a cold sweat build at the back of my neck at the sight of unfamiliar tax-related words printed in an unforgiving font. I would decide I could deal with them later and turn my attention to pleasanter things. Soon the notices became more frequent and were sent through certified mail, which to me conveyed the message: escape is futile. Forcing myself to absorb the contents of the coldly angry envelopes, I learned that I was being asked to pay vast sums – a mixture of accrued interest on unpaid taxes and penalties – that were arguably more than I had made in my summer of (somewhat) diligent scooping. I finally resolved the issue after several lengthy telephone calls, but I came away from the experience with a clear understanding that taxes wait for no woman – the world of finances, however alarming it may be, cannot be ignored.
It was thus in a particularly receptive state that I read the announcement that the recently-founded Swarthmore Wealth Investment Finance Trade, or SWIFT, Education Club was hosting a financial literacy workshop taught by the Franklin Mint Credit Union. The lecture was held in Sci 199 on February 28 and focused on banking and credit, with the comforting title “Money 101.”
Ayana Springfield, branch manager of Franklin Mint, welcomed attendees with snacks and goodie bags containing Franklin Mint paraphernalia and Dum Dum lollipops, which I tried not to take personally. Beth Manley, Franklin Mint’s adult financial education manager, began the talk by explaining the difference between credit unions, which are not-for-profit, and banks, which are for-profit, and therefore attempting to gently gouge you at every opportunity.
“It costs $250 for a bank to maintain one person’s checking account,” Beth said. “So if they are encouraging you to make an account you have to think, how are they going to recoup that?”
Answers to that question include check cashing fees, ATM fees, paper statement fees, plain old monthly fees, and dreaded overdraft fees, which are incurred when you attempt to withdraw more than your available balance, and swiftly increase if the situation is not immediately remedied.
“If you remain overdrafted for several days, you have the potential to go farther and farther negative,” Beth said. A collective gulp could be heard in the room.
Manley also discussed the importance of establishing good credit, which can be necessary for getting hired, renting an apartment, or receiving favorable rates for mortgages or insurance. This can have a harsh snowball effect – the worse your credit, the more things cost, and the more difficult it is to achieve financial stability. Manley stressed that it is easier to establish credit than it is to repair bad credit, which is why it is important to begin preparing early. Overall, the talk advocated awareness – though I came away with a greater host of things to be worrying about, I felt more equipped to deal with them, or at least I felt a stronger need to push through my ingrained head-in-the-sand tendency and take steps to equip myself.
When I spoke to Joshua Collins, the founder and co-president of SWIFT, it seemed that a similar feeling prompted him to begin the club. He described how when he was young his aunt, a banker in Haiti, would make fun of him for not understanding how to best use his money, and it prompted him to educate himself by reading about finance online.
“I got really interested in it and thought, “Let me bring this to the Swat community, because I can’t be the only one feeling this kind of way”, Collins said. “I thought if I can educate myself I can educate other people, then they can educate their family and friends, and build a network of communication and knowledge.”
More than learning about any individual topic, simply becoming aware of financial issues has been the most interesting part of the process to Collins.
“Once you see these things, suddenly you start thinking about them more,” he said. “Getting people more aware is where it starts. You don’t have to have the best financial knowledge in the world, don’t have to have the best background – once you have a little bit of knowledge you’re like, let me keep going with that, see where this leads me. That’s what happened to me.”
I admitted that learning about finances often seemed daunting to me and asked why he thought people felt that way.
“It’s money and numbers,” he said, matter-of-factly. “When you invest, the prospect of losing money is definitely a scary thing. But I think you need to realize that you’re losing money in different ways. If you buy a Starbucks coffee for five or six bucks when you could be making coffee at home, that’s money you could be saving. Maybe investing isn’t the worst idea in the world – you can make some money from that.”
I had never even remotely considered investing, understanding it as the realm of adults in suits, so I asked Collins his opinion. He said that many of his friends who have never invested have started buying Bitcoin.
“I guess they’re going in some direction,” he said, chuckling. “I don’t know if Bitcoin is the way to go but the earlier you start the better it is because of compound interest, and when you’re young you have a higher risk tolerance. You can afford to lose more money now than if you’re close to retirement, so getting people in that mindset is good.”
I described my tax dilemma to Collins, and my perhaps less-than-stunning realization that paying attention to finances is not optional.
“These things are just real,” he said. “No matter if you cover it up with sand, or throw a towel over it, it’s still going to be there. It’s just baby steps – you can’t expect people to jump into this stuff right away. You gotta just hold the hand and guide, that’s really where it starts.”
It might be a couple of years before I start dealing in cryptocurrency, but I felt like I had taken a few steps in the right direction.