As a white Latina, I think a lot about my heritage. I have a white mom of mostly Irish heritage, and a brown dad born in the Dominican Republic.
My heritage informs my every day, and it certainly informs my money. I mean, my grandfather and father moved to the US in the 1970’s to literally flee a dictator after my grandfather was arrested for working with the underground resistance.
When you begin to rank on the shit list of the power mad leader of your country, you’re not thinking about money in the long term or the abstract. You’re thinking “I have to get out of here.”
Not all Latinos have this kind of immigration story, of course, but often there are language, cultural, and financial barriers to overcome when it comes to the basics of building a financial life.
So building generational wealth? Harnessing the power of investing, or building a real estate portfolio? Those are things that many first and second generation Americans aren’t even aware of, let alone fluent in how to create.
It’s why I think money tips for Latinas specifically are so important- Latinas often work full time jobs while also managing household finances. Financially fluent Latinas means the whole family is likely to benefit. It’s a win-win situation.
And generational wealth isn’t just biological! You can pass your money to a non profit, a friend, or an extended family member.
Money Tips for Latinas
Save a cash buffer
Cash is still king when it comes to emergencies. Building a cash buffer for yourself will help you out in two major financial ways:
-allow you to pay off smaller unexpected expenses right away
-prevent you from accumulating or going deeper into debt
How much cash do you need? Aim for 4 months bare minimum living expenses. Things like your rent, groceries, health insurance, childcare, transportation- these are bare minimum living expenses. Netflix and Door Dash do not qualify.
And I do mean aggressively. Invest like your life depends on it…because it does! Latinas are the lowest paid group of women in the US at just $.55 per $1 a white dude makes in 2020.
That gap adds up in the most terrible way over time; Latinas are estimated to lose $1,163,920 in income over a 40 year career.
That $1.1 million is your retirement right here. That’s four rental properties. Missing out on that amount of money because the workplace is sexist and racist is what keeps the Hispanic/Latino community financially stuck.
And it’s what makes investing so important.
The best place to start investing is your workplace retirement plan, like your 401k or your 403b.
If you don’t have a workplace retirement plan, open an IRA. (That stands for Individual Retirement Account.)
Here’s where most people get stuck: they don’t know what to buy and they don’t know how much money they should be investing each month.
How much money should you invest?
As much as you can afford! The more money you have in the market, and the longer period of time you have to let it grow, the more likely you are to become rich through the stock market.
As for WHAT you should buy, that’s different for each person. What the best investment is for you will depend on your age, income, tax bracket, and risk tolerance.
I know that sounds overwhelming. There’s a bunch of things to think about, in an area you don’t feel confident, and that’s why you procrastinate investing. Remember; you’re making $1.1 million less than a white dude!
Investing helps solve that money leak. We break down how to personalize your investment portfolio in our investing course, Talk Money to Me.
Diversify Your Income
I want to see more Latino millionaires. Like, so many more. Diversifying your income is one of the best and quickest ways to become a millionaire.
All diversifying your income means is that you have money coming to you from more than one place.
You have one full time job. That’s one stream of income.
Say you start dog walking after work, and you make an extra $100 a week. You now have two streams of income.
If you lose your full time job, you’ll still have $400 coming in each month.
Or say you buy a house and rent out a room for $600 a month. Now you have your full time job and your rental income.
Having more than one income stream is a rich person secret. It’s how a lot of white families built insane amounts of wealth. They have a successful business AND they own rental properties AND they have investment dividends.
$400 a month might not be life changing, but if you can get your side hustle up to $4,000 a month, or $40,000 a year…you will build generational wealth.
Latinos are 1.7x more likely to start a business than other demographics, and ownership is key to building wealth.
Owning something in your OWN name means:
no one is your boss
you can create work you *actually* want to do
you have an asset to potentially hand down to the next generation
Starting a business is my personal favorite way to diversify your income. Many Latinas WANT to own their own business, but don’t know where to start when it comes to the legal and financial side of things. Our course walks you through how to set up your LLC, create a marketing plan, and build your email list for consistent sales.
Build Financial Community
We win together. And as Latinos, we know the power in close community. That’s why having financial community is so crucial to building generational wealth.
Financial community is a group of people that you can learn with, talk about money with, and help each other reach your financial goals.
I’m talking about starting a group chat with your coworkers about reading a personal finance book together.
Or joining a Facebook group (like ours!) to meet other people getting their money right.
Money moves differently when you’re a Latina. Using these money tips for Latinas is a way to get your money looking cute, and to impact the future.
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