When I first entered the financial industry, I uncovered the abundance of information on financial literacy that is out there. This information is available through public workshops, corporate events, or by simply doing a Google search. However, we all know that to search the web, you must first be aware of the term you are searching for, and I’ve come to realize, that is the first barrier the Latinx community faces and has contributed to our community falling behind on building and accumulating generational wealth.
Financial literacy has typically not been a part of our household conversations. It isn’t something that’s talked about amongst our tios and tias during the usual carne asada. A lot of that isn’t necessarily their fault either, they have not been made aware of a lot of this information. As I mentioned, there are various workshops and events hosted by companies, but they are usually in English. The language barrier excludes a large portion of the Latinx community from these conversations. It then becomes the work and responsibility of the first generation to not only find this information but also find a way to translate it as well.
Since we are not used to talking about finances and the “what if” scenarios, introducing this kind of dialogue can bring about discomfort and therefore create barriers. One of the hardest conversations I’ve had with Latinx households has been the conversation on life insurance planning. The discomfort shows as soon as you mention the words “seguro de vida”. Again, part of it is because it has not been explained to them, but another part is they’re not used to talking about death, which means there is no legacy or estate planning happening. To establish generational wealth, you must think of the generations to come even after you’re gone. This is a cultural barrier we need to break and normalize these conversations within our community.
A mentality that Latinos traditionally have had is the “pues que ellos trabajen asi como lo hicimos nosotros”. This mindset that everyone is in charge of creating their own wealth is leaving our community to fall behind when it comes to generational wealth. This leaves the first generation to do the work of two generations. We work to educate our parents and family members about the resources that are available to help them obtain their wealth, all while working to build our own and establish wealth for the generation to come.
Here are some hard numbers: the 2019 National Community Reinvestment Coalition (NCRC) research report showed that in 2016, the wealth of a Latino household was only $6,300 compared to White Americans, who held $140,500. That is 4.48% compared to White Americans. Latinas between ages 18-64 did not even make half of 1% of the wealth of White men. The biggest wealth disparity came from a strong inheritance disparity, where only 5% of Hispanic and Latinos reported receiving a type of monetary or estate inheritance, while 26% of Non-Hispanic Whites claim such financial background.
Once we start accessing financial resources and normalizing conversations about financial planning within our own homes, we can then bring the conversation to the carne asada!
Cetera Investors is a marketing name of Cetera Investment Services. Securities and Insurance Products are offered through Cetera Investment Services LLC (doing insurance business in CA as CFG STC Insurance Agency LLC), member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. (CA Insurance License#: 0L17443)