Despite attaining higher education levels in recent decades, many Latinos find themselves in a "fragile financial state," according to the study released Monday by the TIAA-CREF Institute, the research arm of the New York investment giant.
The report draws on data from the vast 2012 National Financial Capability Study, a national survey of 25,000 American adults, and examines in detail the personal finances of 1,553 respondents who described themselves as Hispanic and reported at least some college education.
"[W]hile growing in economic importance, Hispanics are set apart from the general U.S. population by gaps in wealth and income, as well as less integration with traditional financial institutions, differences that were only exacerbated by the 2008-2009 recession," the report said. "Such disparities affect even college-educated Hispanics, a growing sub-group."
The study, done in collaboration with Global Financial Literacy Center at George Washington University, adds to a growing body of research on the troubled state of Latino finances, including among the college educated, in the wake of the financial crisis of 2008. Among all U.S. ethnic groups, Latinos were the hardest hit by the crisis and subsequent Great Recession, researchers have found.
Earlier research cited by the TIAA-CREF study shows that from 2005 to 2009, Latino household wealth fell 66%, compared with 53% for African American and 16% for white households.
Unemployment among Latinos doubled from 2007 to 2011, and the poverty rate rose six percentage points from 2006 to 2010, both increasing faster than any other ethnic group, the study said.
The TIAA-CREF survey found that 59% of respondents said they have trouble covering monthly expenses.
It also found that more than half of respondents said they were unable to save at all, and 20% said they spent more than their income over the past year. One third of respondents said they spent as much as their income.
Homeownership among Latino households trails the broader population, with only 53% reporting owning a home compared to 71% for whites, according to the survey.
Illustrating both a cause and symptom of Latino financial difficulties, half of the respondents reported engaging in expensive credit-card practices that can run up interest charges and fees, including paying the minimum monthly balance only, using a card for a cash advance or incurring a late fee.
Source: Originally published on The Los Angeles Times as 59% of college-educated Latinos have trouble meeting monthly expenses, report says, byDean Starkman, May 18, 2015.
- Author: Mass Mutual Financial Group
"This newest research is in line with our ongoing State of the American Family Study; it shows that Hispanics are invested in their future," said Chris Mendoza, Vice President, Multicultural Market Development at MassMutual. "They recognize the many facets of financial security— valuing planning and research more than the general population. They are closing the gap but still need knowledgeable guidance to help ensure financial stability and informed decision-making."
Hispanics are more likely to have sought financial information overall (82 percent vs. 75 percent) and from financial institutions (48 percent vs. 44 percent) more than the general population. They also are more likely to seek out information on personal finance and retirement planning than the general population, turning to family (37 percent vs. 27 percent), friends (26 percent vs. 19 percent), and significant others (24 percent vs. 18 percent) for information.
In retirement, education, and emergency security, they take fewer risks. Hispanics are almost twice as likely (51 percent) than the general population (27 percent) to carefully research and plan every detail of their education and are more likely to have sufficient "rainy day" funds (35 percent vs. 31 percent). Additionally, they are more likely to carefully research and plan every detail of their retirement (42 percent vs. 32 percent) and are more likely to work at their retirement plan until they believe it's perfect (38 percent vs. 24 percent).
Source: Published originally on Mass Mutual Financial Group as Hispanics Less Likely To Leave Their Financial Future To Chance, January 14, 2015.
- Author: MarketingCharts.com
Perhaps as a result, the national issue that respondents are most concerned with regards creating more jobs and fixing the economy, with 23% selecting this as their top issue from a list of 12. Immigration reform and deportations (18%) is Latinos' second-largest concern, followed by gun violence/gun control/crime/public safety (12%) and education/schools (9%).
The following provides some quick highlights from the various themes covered in the report.
Economy and Finances
- 51% of respondents feel that their personal finances have gotten a lot better (11%) or somewhat better (40%) during the past 5 years, but almost 4 in 10 feel they've gotten either somewhat (22%) or a lot (17%) worse. Those most likely to report better finances included respondents with income of at least $75k (73%), those aged 18-39 (60%), and men (54%).
- 73% are very (28%) or somewhat (45%) optimistic about the future of their finances and the opportunities that may lie ahead. Optimism is again highest among those aged 18-39 (81%) and with income of at least $75k (81%).
- 49% are very (26%) or somewhat (23%) worried that they or someone in their household might lose their job and become unemployed in the next year or so.
- 63% feel that childcare issues do not make their work situation difficult, although 29% do.
Health
- Almost one-third describe their own health as excellent (11%) or very good (20%), with another 32% describing it as good.
- 49% visit a health provider regularly, and an additional 10% somewhat regularly.
- If they feel ill or sick, respondents are most likely to usually go to a doctor's office or private clinic (53%), while 25% usually go to seek healthcare at a community health center or clinic.
- 8 in 10 have a healthcare provider that speaks Spanish or has a translator available.
- Asked how familiar they are with the Affordable Care Act, sometimes referred to as Obamacare, fewer than half reported being very (15%) or somewhat (29%) familiar, and one-third say they're not familiar at all with it.
- Three-quarters have health insurance.
The Latino Experience
- 54% feel that local police, border patrol and other law enforcement authorities usually (26%) or sometimes (28%) treat Latinos fairly, while 37% feel they're usually treated unfairly.
- Two-thirds worry that police, border patrol or other law enforcement authorities will use excessive force against Latinos.
- 35% are very (7%) or somewhat (28%) satisfied with the federal government's performance on immigration policy, outweighed by the 57% who are not very (25%) or not at all (32%) satisfied.
- Respondents are more likely to believe that English language media portrays Latinos in a generally negative (27%) rather than generally positive (15%) light. By comparison, they're more likely to believe that Spanish-language media portrays them in a generally positive (38%) rather than generally negative (10%) light.
About the Data: Between September 19th and October 15, 2014, Latino Decisions interviewed one thousand Latino adults who reside in the United States. Respondents were evenly split by gender and by country of birth (US versus foreign-born). 7 in 10 are US citizens and 51% are 1st generation in the US. A majority 55% cited their country of origin as Mexico.
Source: Published originally on MarketingCharts.com as Key Stats About Latinos' Outlook and Attitudes,November 17, 2014.
- Author: National Council of La Raza
Latinos continue to be among the most unbanked ethnic minorities in the United States. The report highlights the challenges confronted by the unemployed, differences in financial engagement by citizenship status and the use of bank technology by participants.
The report found an important link between naturalization (citizenship) and increased usage of financial systems—noncitizen Latinos were less likely to engage in banking practices. The report also found that 73 percent of the participants managed to put away some savings despite the down economy and that good customer service was paramount to deciding where to bank.
“As the Senate debates how to overhaul our nation’s immigration system, it is interesting to note the link between immigration status and engagement in our financial institutions,” stated Janet Murguía, President and CEO of NCLR.
“Many eligible immigrants have been unable to naturalize because of the cost prohibitive fees, while others may be struggling with finding a way to fully legalize their status under current law. There is no doubt that Hispanics are an increasingly critical consumer base, particularly in times of economic recovery when their full participation helps to stimulate the economy through purchases and savings. The more engaged and fully participating in our financial services they are, the more they and the nation benefit.”
The survey also delved into the use of technology for banking purposes, finding that younger Latinos were more likely to use mobile banking technology when compared to older Latinos. Those who had a bank account were more likely to have access to the Internet than Latinos without a bank account and were more likely to have performed a financial transaction using this medium. Those who demonstrated reluctance to using the internet for this purpose were primarily concerned with the security of personal information.
The report details a body of recommendations to increase Latino financial engagement, including expanding citizenship and economic integration, increasing account ownership through goal-based outreach and product development, promotion of personal savings and bridging the tech divide with trusted partners that can help assuage fears of privacy violations.
“Bringing Latinos into the practice of engaging financial institutions to create savings, make purchases and manage their personal finances will be of huge benefit not just to their long-term success, but to the nation’s short- and long-term economic growth and stability. We are encouraged that through building the right partnerships and engaging in purposeful outreach and educational efforts, we will be able to effectively reach the underserved Latino community,” concluded Murguía.
Source: Originally published on National Council of La Raza as Latino Financial Access and Inclusion in California, June 6, 2013
- Author: NBCLatino, by Sandra Lilley
For many Latino families, average household incomes in the past decade have gone down. Hispanics lost 66 percent of their household wealth following the Great Recession, and unemployment has been high among Latinos. This has resulted in two things. Households have reduced spending, but for big expenditures like mortgages, automobiles and higher education, families have to take on additional debt.
Yet in the area of student loans, and even more so with auto loans, Latino families are still being steered in many cases toward riskier and even predatory loans, according to a new report from the Center for Responsible Lending.
In the case of auto loans, for example, families with low credit scores have basically two options: Applying for a loan over the internet with a lender the consumer has never heard of, or financing through the car dealer. Low-income consumers or those with poor credit are more subject to yo-yo scams, where the dealer changes the terms of the initial loan yet refuses to give money back to the family if they don’t agree, and even threatens the consumer with auto theft if the buyer does not immediately return the car. Most families agree to the changes and pay interest rates of 5 percentage points or higher than conventional loans.
As credit has tightened, more low-income borrowers or those with subprime credit are using these kinds of services, warns the report.
In the area of student loans, the average student is graduating with around $25,000 in debt, and in 2008, eight percent of Latinos had debt of over $40,000. That percentage will increase as more Latinos pursue higher education. One way to limit risk is to take out federal loans instead of private student loans. Yet the study found that 40 percent of families had not used up their federal student loan eligibility, even though federal student loans have lower interest rates and easier payment terms. Private loans are riskier, since the uncapped adjustable rates make it harder for students to anticipate how much they will be paying years later. Private student loans cannot be discharged in bankruptcy.
“A recent survey of student loan borrowers with high debt levels found that about 65 percent misunderstood or were surprised by aspects of their student loans or the student loan process,” said the report.
Understanding the risks of student loans is especially important as higher unemployment and a tighter job market has made it harder for more students to repay and has contributed to more loan defaults
The Center for Responsible Lending, urges Latino families to visit non-profit centers in their communities to obtain financial counseling and guidance before embarking on a car or student loan
Source: NBCLatino, by Sandra Lilley, Report: Predatory auto and student loans still targeting Latinos, December 14, 2012.