Hispanics/Latinos define financial success as caring for loved ones, helping the next generation and leaving a legacy.
Cultural beliefs can present barriers to financial success, including an aversion to investing and not saving for retirement.
Financial education, automating saving and working with a financial professional are three ways to get on the path to financial wellbeing.
Whether you identify as a Hispanic or a Latino, you probably love your family deeply and would go to the ends of the earth for them. You also want your family to be proud of you and what you’ve accomplished in life, and you want nothing more than to leave a financial legacy for your children and a mark on your community.
Affluent Hispanic/Latino people tend to see financial success as a pathway, opening doors not only for them but also their wider circle. A good share set aside a portion of their income to help extended family members both inside and outside the U.S.
But while most Hispanics/Latinos believe that hard work pays, societal barriers and cultural beliefs can sometimes hinder their progress toward financial wellbeing.
“For many Latinos, success means that you build off your parents’ hard work,” says Christy Isordia, a Wealth Management Advisor with U.S. Bancorp Investments. “But we need to learn to work smarter, not harder, if we’re going to set ourselves up for success.”
A significant barrier to financial success for many Hispanics/Latinos, particularly those in older generations, is the fear of investing outside of real estate, especially stocks and bonds, she says.
“For many in the community, if they can’t see it, they can't touch it; it fluctuates too much for them,” Isordia says. “Even my mom doesn’t want to invest in stocks because she doesn’t want to lose anything. The fear of fluctuation is big for them.”
She also notes that many in the community also don’t understand financial terminology and thus avoid the investment world, assuming that it’s too complicated.
“We can help people be successful in their financial goals. Right now, their money is just sitting there, but we can help them build their investments so they can better realize their goals.”
Christy Isordia, Wealth Management Advisor with U.S. Bancorp Investments
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Many older Hispanics/Latinos also haven’t engaged with the concept of saving for retirement, Isordia says, as it was always expected that their adult children would take care of them. This means that many older people didn’t seek out jobs with 401(k) plans, and they may not have had financial education on topics such as types of retirement plans, like IRAs (individual retirement accounts).
As part of this, younger generations have often taken on debt to assist aging parents or left their careers altogether.
“A lot of people in the community feel like they will have to leave their job to take care of their parents,” Isordia says. “They don't look at different options for parents, such as getting help from caretakers. This was especially true for taking care of parents in the Silent Generation, but I’m beginning to see some differences as baby boomers start to retire.”
Older generations also didn’t tend to leave financial legacies for the next generation, preferring the mentality of, “I worked hard to get ahead; now you have to work hard to get ahead.”
“Now, more Hispanics and Latinos are making sure their kids are going to be OK, though I don’t feel that’s happening as much as it should, and we’re starting to educate people on that,” Isordia says.
With all that background in mind, here are five tangible steps Hispanics/Latinos can take today to begin working toward financial wellbeing.
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