Letters to the Editor

Financial literacy can alleviate poverty

As Miamians, we have much to be proud of. We are America’s most diverse city.

Nearly 60 percent of our residents are foreign born. We are dynamic, entrepreneurial business creators. We continue to expand our stature as a global city fueled by our growth as a financial, trade and cultural center.

In spite of all this progress, the level of Miami-Dade’s poverty rate continues at unacceptable levels.

There is no simple answer for lifting Miamians out of poverty, but there are relatively low-cost steps that we can take that can make a profound difference. One of these is simply making more people financially “literate” — giving them the tools to successfully navigate through an increasingly complex economy.

When I arrived in the United States with my family in the early 1960s, life was much simpler. In neighborhoods like mine, payday came once a week. People paid for the rent, utility bills and groceries with cash. Credit was rare and credit cards were unheard of.

Today, cash is virtually disappearing and those who still try to get by using only cash are at an increasing disadvantage. They pay fees to cash their paychecks, buy money orders to pay bills and outrageous fees to payday or car title lenders when they need a little credit to deal with an emergency or unexpected expenditure.

These people are usually already struggling financially and can least afford to have bite after bite taken out of their paychecks. They are also often immigrants who arrive in America with a distrust of banking and an attachment to assets they can see and touch — especially currency.

For many, this attitude persists even when they manage to save or borrow enough to start a business. More than half of the small businesses in this country still don’t accept credit cards.

In today’s economy, that’s often a recipe for failure, and may be one reason that our immigrant communities tend to be poorer than the country as a whole even though they tend to be more entrepreneurial.

Teaching people about the drawbacks of using just cash, about alternative financial tools, about using credit wisely and about avoiding predatory lenders can go a long way toward removing the economic obstacles facing our economically vulnerable communities. As an example, financial education programs and technological innovations like prepaid payroll cards as an alternative to paychecks can break down cultural barriers keeping immigrants and others outside the financial mainstream.

Miami is one of the most dynamic cities in the world. Our city personifies the American dream, and must serve as a model for prosperity and opportunity for all.

With more banks connecting the dots between financial literacy, reducing poverty, expanding prosperity and creating new customers for their services, thousands of Miamians struggling from paycheck to paycheck will have a better shot at achieving the dream for themselves.

Manny Diaz, former mayor, Miami