Oct 2, 2020
Stash Examines the Top Financial Goals and Challenges of Latinx Americans
By Claire Grant
Struggles with financial literacy begin early, but learning at home is key.
While Latinx Heritage month is a time to celebrate Latinx Americans and Latinx culture and history, it’s also an important time to reflect on the financial roadblocks facing Latinx people.
Financial literacy, or the ability to assess your financial situation so you can regularly make the right decisions about money, may be lower among Hispanic Americans than the U.S. population as a whole, according to the Financial Industry Regulatory Authority’s (FINRA) 2018 National Capability Study. The study tested respondents on six questions to gauge financial literacy. Hispanic Americans answered 43% of the questions correctly, compared 50% of total respondents who answered the questions correctly.
A September, 2020 survey conducted by Stash* found that Latinx Americans said they struggled with aspects of financial literacy starting from an early age. When asked how financially literate they felt at age 18, 57% of Latinx respondents said that they didn’t feel financially literate, approximately five percentage points higher than Black respondents, four percentage points higher than Whites, and 2.5 percentage points higher than Asian Americans.
(Note: Stash uses Latinx as a gender neutral adjective referring to anyone of Latin American descent. Some external data references Hispanic Americans, which describes people primarily from Spanish-speaking Latin American countries. )
Other findings from Stash’s survey
Here’s what Latinx consumers had in common with most other groups. The survey found that 53% of Latinx respondents rarely or never talked about money or personal finances growing up. Similarly, 53% of Black and 52% of White respondents also said they seldom spoke about money matters growing up. Asian Americans fared a bit better, with 42% of those surveyed saying they rarely talked about money growing up.
However, a third of Latinx respondents also said that they received financial education from their families. The trend of talking about money at home appears to be on the rise for younger generations. Millennial Latinx respondents are 40% more likely than their Baby Boomer respondents to say that they received financial education from their families.
Latinx respondents expressed somewhat less confidence than other groups about their ability to meet financial goals, with nearly half (48%) saying they were somewhat confident, and 42% saying they were very confident in their ability to achieve them. Something to note, suggesting a gender disparity: Latinx men were 35% more likely to feel “very confident,” and Latinx women were 66% more likely to feel “not confident” about their goals.
Comparatively, 55% of white Americans and Asian Americans said they felt “somewhat confident” about achieving their financial objectives. (An exception is Black Americans, 46% of whom said they were somewhat confident about their financial goals.)
Among Latinx respondents, the most popular financial goal was no longer living paycheck to paycheck (26%), followed by paying off debt (21%) and building up a retirement fund (20%). Similarly, no longer living paycheck to paycheck was the most-chosen financial goal for Black Americans (29%) and Asian Americans (23%), for whom paying off debt was another top goal. In contrast, White Americans said their biggest goal was building up a retirement fund (28%), followed by paying off debt (23%).
Financial issues Latinx Americans face
The gap that Latinx Americans face in financial literacy may make the financial obstacles faced by this community even more daunting. Latinx Americans, particularly women, face a gap in compensation. As of 2017, the median annual income for a Hispanic man was $38,876, compared to $60,388 for white men. Hispanic women earn even less. The median income for a Hispanic woman was $32,002, while the median income for a white woman was $46,513.
Latinx men and women also accumulate less wealth throughout their lives than White men and women do. Where white men earn $2.7 million in their lifetimes and white women earn $1.5 million, Hispanic men earn $2 million and Latinx women earn $1.1 million.
Meanwhile, Latinx Americans also face a more difficult path to homeownership, which can be an important way to build wealth. Latinx Americans are reportedly less likely than White Americans to own their homes and more likely than white Americans to be denied for a mortgage.
How Stash can help
Stash aims to bridge the gap in financial literacy for all Americans, regardless of your background. With Stash, you can open a checking account with no account minimums3, no overdraft fees4, and no monthly or annual maintenance3.
You can also start investing and saving for your financial goals, such as retirement, on Stash. You don’t need to be a financial expert to start saving and investing. StashLearn has plenty of education and guidance to help you get started.