I’m frustrated with mainstream personal finance media. Much of the advice, especially for women, revolves around telling us to curb our “bad spending habits,” save money by clipping coupons and where to get the best deals on the latest fashion trends.
This is myopic and exclusionary. And it rarely considers the realities of the rapidly growing Latina population. As Latinos, community is at the center of who we are. We aren’t just building wealth for ourselves. We are trying to overcome generations of poverty and struggle. As a first-generation Latina, I need culturally relevant, specific advice that addresses the unique challenges my peers and I face.
Here’s a look at why personal finance is different for Latinas and how we can be better served.
We Are Paid Less Than White Men and White Women
On average, Latinas in the United States earn 43% less than white men and 28% less than white women. In 2020, Latinas earned just 57 cents for every $1 that a white, American man made. This pay inequity amounts to over $1 million dollars in lost lifetime wages.
There’s a common myth that this discrepancy is simply because Latinas tend to be employed in lower-paying professions—but the data shows otherwise. Even in the same job, Latinas are often paid less than white men. For example, Latina nurses earn 27% less than white male nurses, on average.
Latinas are going to college at higher rates than ever before. But education doesn’t eliminate the pay gap either. Latinas with a bachelor’s degree earn an average of 35% less than white men. Bridging the Latina pay gap is an essential part of bridging the Latina wealth gap.
The takeaway: Generic counsel, such as “invest 10% to 15% of your paycheck for your retirement,” feels elitist and blind to cultural differences and inequalities.
Some of Us Face a Multi-Generational Retirement Crisis
Many Latino families aren’t prepared for retirement. In fact, more than two-thirds of Hispanic households aren’t putting aside anything through workplace savings vehicles such as 401(k) plans, according to Morningstar.
That puts a lot of pressure on those of us trying to build wealth for retirement while also planning to financially support aging parents and family members located overseas.
According to the St. Louis Federal Reserve, Latino families had just $38,000 of median wealth—about 21 cents for every dollar of white family wealth. Many Latinas I speak to on my Yo Quiero Dinero podcast are overwhelmed with the burden of having to support multiple generations, such as kids and parents, at the same time.
In addition, many Latinx households think investing is risky and unsafe. There is an overall lack of trust in financial institutions because many older generations of Latinx immigrants hail from countries and territories where government corruption, failed economic policies and social unrest are common. There is also a lack of representation in the financial professional space. The Certified Financial Planner Board reported that only 2.46% of CFPs identified as Hispanic in 2020, despite Hispanic individuals comprising 18.4% of the total U.S. population.
The takeaway: Latinas face different financial pressures than other demographics, yet most of the financial advice and assistance isn’t targeted to our needs and circumstances. Goals related to wealth building and investing can feel out of reach when we don’t see ourselves represented in these important financial conversations.
We Often Have a Scarcity Mindset and Face Stigma Around Admitting Any Mental Strain
In general, Latinos don’t typically seek help for mental health issues, including those caused by financial strain. A 2020 study on low-income Latinas and the relationship between financial stress and mental health found that we are less likely to receive mental health services than non-Hispanic whites or African American women. In an earlier study, Latinos attributed interpersonal problems and economic strain as significant factors affecting their mental health and described a lack of coping strategies and emotional support systems.
At the same time, many first-generation Latinas identify with a scarcity mindset, a psychological tendency to fear that there isn’t enough (money, resources, etc.) and that we must avoid risky behaviors like job-hopping, advocating for a salary increase or investing in the stock market.
The takeaway: We may have seen our parent/parents struggle to make ends meet and, as a result, associate money with sacrifice, exhaustion, overwork, stress and familial chaos. Then combine that with a pervasive stigma in the Latinx community that seeking help for mental health disorders is a sign of personal weakness or failure. For Latinas to become financially confident, personal finance advice needs to be heavily focused on helping this community overcome these limiting beliefs.
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Jannese Torres-Rodriguez is an award-winning Latina money expert, speaker, writer and business coach. She helps her clients and her Yo Quiero Dinero podcast listeners build successful online businesses that allow them to pursue financial independence and freedom.
Photograph: Courtesy Jannese Torres-Rodriguez