The Top 3 Financial Challenges Hispanic-Americans Face

Top Financial Challenges Hispanics Face

Hispanic Americans make up one of the fastest growing segments of the U.S. population, and with more Hispanics being birthed in the U.S. then ever before, the growth of this group shows no signs of slowing down. The US Census Bureau projects the Hispanic American population to increase 115% by 2060, at which point they will represent 30% of the entire population.

And this burgeoning segment is not growing without prosperity. According to the Hispanic Access Foundation, the buying power of Hispanics is exceeding $1 trillion and is expected to grow another 50% over the next five years. Hispanic business owners alone contribute more than $70 billion to the US economy.

But despite their entrepreneurial and financial success, nearly half of all Hispanic Americans surveyed by Mass Mutual still reported feeling less financially secure than other groups. So how do we explain this disconnect? For many Hispanics, the following factors tend to get in the way of preparing for long-term financial success and, subsequently, create feelings of financial insecurity.

1) Language and Monetary System Barriers

For native-born Hispanic Americans, the language barrier and US monetary system are far less problematic than they are for older members of the population who immigrated to the U.S. at an older age with limited language skills and resources.

Being a non-native English speaker entering a country with a completely different monetary system can pose huge problems for individuals trying to decipher complicated US tax forms, legal contracts, or applications for credit. Many times, the less fluent, older Hispanic populations will rely on help from their teenage children (or even grandchildren) to translate and interpret such forms!

It’s also no secret that unscrupulous lenders have been known to exploit the language barrier by convincing these non-native speakers to apply for predatory loans that carry sky-high interest rates, variable interest rates, or negative amortization.

2) Family Responsibilities

Familial financial support is a trend that is more prevalent amongst the Hispanic community than other groups. A study done by Bank of America revealed that 25% of Hispanic Americans help support their family as soon as they are able to work and 28% currently continue to do so, or expect to do so in the near future.

And this isn’t a trend that promises to dissipate, with 36% of Hispanic Millennials expecting to support their parents financially (compared to 19% of non-Hispanic groups). Young Hispanic Americans are charged with caretaking for the older generations who immigrated to this country with no savings or financial education.

These near-term familial responsibilities tend to tie up an individual’s income, decreasing their ability to save and invest for long-term goals like retirement.

3) Lack of Trusted Financial Information

Research indicates that Hispanic Americans have no difficulty prioritizing their finances when it comes to budgeting and tracking expenses: 53% report they track their expenses (compared to 48% of non-Hispanics) and 31% plan and stick to their budget every month (compared to 24 percent of non-Hispanics).

But, 84% percent of Hispanic Latino Americans wish they had access to more information about homeownership, investing, saving, taxes, obtaining credit, and retirement. In fact, Hispanics and Latinos are often the first to sign up for financial planning or retirement guidance when offered through the workplace.

Many Hispanics don’t know where to turn, grow frustrated when services are not also available in Spanish, or don’t think that financial services companies will know how to address households like theirs.[i]

For individuals who don’t have access to workplace financial education, or for entrepreneurs who are running their own businesses, the main issue is finding a trusted institutions or individual who will:

  • Be able to communicate in Spanish when needed
  • Provide educational materials and online services in Spanish
  • Get to know the client and the client’s family as individuals
  • Provide personalized advice tailored to their situation
  • Understand and respect their core values

At Harbor West, we understand that these challenges can jeopardize an individual’s chances of being financially successful in the long-term, which is why we seek to be a trusted ally to those Hispanic Americans looking for help. We provide bi-lingual financial planning education, advice, services, and ongoing support for our clients and their extended families in order that our Hispanic communities will not only continue to grow and prosper today, but also into the future. Contact us today to speak with a member of our team to discuss how Harbor West can help your family invest and build wealth for the future. Se habla español.

[1] Mass Mutual Hispanic Middle America Financial Security Study. https://www.massmutual.com/-/media/files/mm-hispanic-finances-study. 2 June 2019.

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Regulatory Disclosure: The information on this website has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. This website is neither an offer to sell nor a solicitation to buy any securities. Gerard Gruber offers Securities and Investment Advisory and Financial Planning service through Geneos Wealth Management, Inc, Member FINRA/SIPC.  Investments are not FDIC insured. Investments are not deposits of the financial institution and are not guaranteed by a financial institution. Investments are subject to investment risks including loss of principal amount invested.