By: Julissa Treviño
Generally, there’s a lack of accurate financial information in the Latino community, says financial coach Merlin Salamanca. A lot of that has to do with the fact that talking about money is still taboo, but this isn’t the only cultural barrier that can prevent Latinas from saving and budgeting. “Sometimes by choice, but sometimes as a cultural duty to our families, Latinas often feel the need to provide for others before we provide for ourselves,” she says.
As we welcome the New Year, we’re here to help you achieve your financial goals at every age – whether you’re saving for college, preparing for retirement, or somewhere in between. Read on for our long-term financial planning tips, and make sure to download our handy infographic to start making a difference in your budget today.
In Your 20s
Consolidate your student loans. Consolidating student loan debt allows you to make one manageable payment each month, simplifying and lowering your monthly expenses. You can find a lot of information and how-tos on consolidation online. Remember that consolidating federal loans is free through the Department of Education.
Create a budget that works for you. Add up the amount per month that you need to pay your bills and student loans, and then figure out how much you can save and how much you’ll have left for entertainment and going out. Consider using a budgeting app (there are several great online options), which can help you save money, budget for upcoming expenses and avoid overdrafting.
Start a simple savings plan. Even if you don’t have a lot of money to save, start small. Open a savings account that allows you to deposit a little bit from each paycheck – even every two weeks adds up over time! Planning ahead for emergency expenses can help you avoid debt in the future. “There is an unfortunately significant amount of debt among communities of color,” Salamanca says. “Oftentimes this is not because of luxury goods, but from family emergencies and educational expenses.”
A small savings account can jumpstart a big milestone, like buying your first home or getting married, too. Since bodas are usually a family-funded event, “knowing in advance how much the family or other individuals can afford can make for a stress-free celebration,” Salamanca says.
In Your 30s
Save up a little every month for big purchases. If you know you want to take a family trip or that you need a new car next year, make the expense manageable by saving throughout the year. This is one of the four major principles of You Need A Budget, an online, subscription-based budgeting app, that helped freelance writer and editor Irina Gonzalez change her approach to big purchases. “[My fiancé and I] went through and calculated how much our car insurance is, travel we want to do, how much vet bills will be, and those big purchases that we know are coming but never save up for. Then we split up how much we'd need to save every month in order to not fall behind on our bills.”
Be smart about everyday purchases. “Food is a major day-to-day area where Latinas can find significant savings,” Salamanca says. Save money by only buying the items you and your family will eat, even if it means going to the grocery store multiple times per week, and plan meals ahead of time to save both time and money.
Additionally, think about spending more upfront for household items. The one-ply store-brand paper towels might seem like a good idea, but you’ll likely end up going through them faster. Instead, go for brands like Charmin, Bounty and Tide that are a little more expensive but will last you longer. In this case, it’s true that “lo barato sale caro”!
And don’t be afraid of couponing, adds Salamanca. “In my Latino community, I have sometimes heard individuals gasp at the thought of using coupons, but there is no shame in saving money,” she says. A couponing app, like FLIPP, makes it easy to search for coupons by item, brand or category.
Contribute to a 401(k) . For your best chance at a decent retirement income, contribute 15 to 20 percent of your gross income to your retirement account, Salamanca suggests. Many workplaces offer retirement savings accounts like a 401(k) or a 403(b), a similar account that’s offered when you work for a nonprofit. Make it easy by arranging to have those savings taken out of your paycheck automatically.
Plan for future family care. Because the burden of elder care often falls on Latinas, Salamanca suggests having a conversation with loved ones about when they plan to retire and how they plan on getting there. “It’s very difficult to think about a time when we will not be working, oftentimes feeling that we no longer have a purpose or that we won’t be able to provide for our families. However, our bodies cannot work forever,” she says.
In Your 40s
Work toward getting out of debt. The expenses of owning a home and raising children add up, and as much as you may have tried to prevent debt, chances are you have a credit card balance or other kinds of debt. Now’s the time to start thinking seriously about paying it off. Meeting with a financial planner may be beneficial, but what’s most important is reducing your expenses and bumping up payments to your mortgage or credit card bills.
Start a college fund for your kids or grandkids. “With more and more Latinas entering college each year and the cost of a college education skyrocketing, families often find it difficult to pay for these expenses,” Salamanca says. For families who are considering the cost of a college education, you might benefit from contributing to a 529 plan, which is a tax-advantaged savings plan for college expenses.
“This doesn’t mean creating a culture of mantenidos,” Salamanca says. But ensuring your family’s needs are met and that they’re making smart financial and life choices can end the cycle of living paycheck to paycheck.
In Your 50s
Start thinking about how you’ll live on retirement. Generally the later you take Social Security benefits, the better. So while you can technically retire early at age 62, you will only get 70 percent of the monthly benefit, and you’ll benefit most by waiting until you reach full retirement age, now 67.
Consider how you will live after retirement, and set up a budget around your fixed income, suggests CNNMoney. Living on this expected fixed income even before retirement can be a great way to prepare and save a little extra.
Change the culture around money. Latinas are often the financial center of our community, and many times we take on a lot of the responsibility around money in our households. “Latinas can empower themselves by obtaining financial independence and then fortify their community by bringing those principles to their familias,” Salamanca says. “Without these conversations, we cannot know if our family members are getting their needs met or if they will be cared for in the future.”
Julissa Treviño is a freelance writer and journalist currently based in Texas. Her work has been published in BBC Future, Racked, Columbia Journalism Review and The Dallas Morning News. Follow her @julissatrevino.
Managing your finances and achieving financial stability involves many factors. P&G everyday is not responsible for loss of funds or financial hardship as a result of following the advice stated above.