Acquiring Financial Literacy Can Help Hispanics Save and Invest Money
Whether it’s saving for retirement or building wealth, Hispanics are lagging behind. They can also stay away from traditional bank accounts.
A number of reports highlight the disparities, including one from the Federal Reserve in St. Louis which found that Hispanic and Latino families had only $ 38,000 in median wealth in 2019, or 21 cents for every dollar in white family wealth.
Meanwhile, more than two-thirds of Hispanic households save nothing through employer-sponsored plans like the 401 (k) and only 8% say they have an individual retirement account or similar plan, according to a report. by Morningstar. More than 12% of Hispanic households do not have a bank account, according to the Federal Deposit Insurance Corp.
While the problem of the wealth gap needs to be addressed, gaining financial literacy can go a long way in helping financial stability, suggests Yanely Espinal, director of education outreach at Next Gen Personal Finance.
Hispanics have lower levels of financial literacy than whites, according to the TIAA Institute-GFLEC Personal Finance Index. Hispanics answered 41% of the questions correctly, compared to 55% of Whites.
“For my parents and many other Spanish speaking immigrants, a lack of financial literacy translates into thin credit records with poor credit scores / no credit scores, no knowledge or ownership of retirement accounts or brokerage accounts. , and frustration with traditional banking services, ”said Espinal, whose parents immigrated to the United States from the Dominican Republic.
The Covid-19 pandemic has made it clear that Latino and Hispanic workers are overrepresented in low-wage work environments, she noted. When limited funds are distributed in multiple ways, people are forced to prioritize short-term financial needs over long-term goals, she said.
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“This results in repeated cycles of financial struggle,” said Espinal, a member of the CNBC Invest in You Financial Wellness Council.
Learning About Roth Custodial IRAs and Custodial Brokerage Accounts for Hispanic and Latin American Youth, and Helping Families Understand the Benefits of Starting Early with 529 College Savings Plans are Incredibly Powerful Ways to change the narrative. “
To this end, CNBC Invest in You is working with Telemundo to offer Spanish-speaking Americans our Money 101 newsletter in Spanish. (Click here to register for Dinero 101.)
The newsletter, by Sharon Epperson, CNBC’s senior personal finance correspondent, is an 8-week course in financial literacy and includes help with budgeting, saving for retirement and creating an emergency fund. By registering for the course, you will also receive bonus newsletters to help you manage financial issues throughout the pandemic.
Not only will you gain financial knowledge, but you will be able to use this information to open conversations between family members.
“Culturally, conversations about money are something that most Latin American families don’t have,” said Louis Barajas, a certified financial planner who works with the Latin American community in East Los Angeles.
He urges people to read and speak up if they don’t understand something.
“It’s about not being ashamed, of not feeling guilty, of not feeling embarrassed, of not feeling embarrassed to say, ‘I don’t understand, can you please tell me? ‘explain “,” he said.
SUBSCRIBE: Dinero 101 is an 8 Week Financial Freedom Learning Course, delivered weekly to your inbox (Spanish version), or if you would like to receive the English version Money 101, click here.
Disclosure: NBCUniversal and Comcast Ventures are investors in Tassels.