The 5 Critical Measures for Building Wealth for Latino Communities in Crisis

It’s hard to unsee the image of 5-year-old Liam Cornejo Ramos, in a blue bunny hat and Spider Man backpack, surrounded by Immigration and Customs Enforcement agents before he was detained.  

We’re being bombarded with daily images of ICE’s terrorization of Latinos and allies—regardless of immigration status—in major cities across the country. Pew Research Center found in its most recent National Survey of Latinos, that 68 percent of respondents say that our community’s situation has worsened in the past year.  

Yet at the same time, we’re seeing the economic power and appeal of Latinos exemplified. Benito Antonio Martinez Ocasio, aka Bad Bunny, drew a whopping 128 million viewers. Spending on Super Bowl watch parties reached a record-breaking $20.2 billion dollars this year, with a big chunk of that being Latino families that were tuning in to see what many dubbed as “Benito Bowl.”   

I’ve written before about how tired I am hearing about how much spending power we have ($4.1 trillion dollars, according to UCLA). We are a community in crisis right now. We are being targeted by our own government and now more than ever, it’s imperative that we build our wealth. So I put together a list of five measure we need to take to build a foundation to build our lasting wealth. Here they are:  

Measure No. 1: Raise Credit Scores from the 500s or 600s into the 700s 

A good credit score is critical for access to credit and favorable interest rates, which can ultimately save us money. Our credit is also frequently pulled when we’re applying for housing or work.  

According to Investopedia, our community has an average credit score of 667, which is in the “fair” range. We should aim to move our credit scores into the 700s, which can open doors for us. Doors to lower interest rates, better housing options, lower-cost insurance, and fewer financial “nos.”  

Credit is simply a system that we need to navigate—a system that rewards consistency over perfection. Please remember that your credit score is not a reflection of your character.  

Here are the key things you should focus on to increase your credit score:  

• Pay your bills on time, every month.  

• Stop applying for new credit. 

• Pull your credit reports and spot any errors that you might need to fix or correct. 

• Lower your credit card balances to below 30 percent usage.  

• If at all possible, pay of your entire credit card balance every month.  

A higher credit score doesn’t guarantee you’ll be wealthy, but a low credit score will definitely keep you trapped in poverty.  

Measure No. 2: Lower Interest Rates on All Debt 

Most of the time, our families weren’t taught to look at the interest rate before we take on new debt. And as a result, we sometimes trap ourselves in high-interest-rate debt.  

Interest is a silent wealth killer. High interest rates increase the total cost of your debt, and Forbes reports that with rising debt, that can impact both you and the generations coming up behind you.  

And UnidosUS reported that debt is already a problem for our community, with half of respondents saying debt is impacting their ability to save money and a third saying they are not confident they can pay off their debts in the next decade.   

Here are key things you can do to lower your interest rates:  

• Improve your credit score because the higher your credit score, the better your interest rates will be when you apply for new debt or refinance old debt.  

• When taking on new debt, do your research and compare rates and go with the lower-rate options, especially when you’re getting a new credit card, taking out new personal loans, or buying a new car. When it comes to car loans, you can actively seek zero-percent deals. For example, U.S. News puts together a list of the best zero-percent APR car loan deals. 

• If you have already taken out debt with a higher interest rate, call your lenders to renegotiate rates. This might not work every time, but it’s always worth a shot.  

• Avoid emotional borrowing and any type of advance payment loans. 

Lowering your interest rates is one of the fastest ways to create breathing room without earning more and can save you tens of thousands of dollars over your lifetime. Plus, lower interest means more of your money stays with your family. I want you to keep in mind that your interest rate shouldn’t be the thing that decides how long your dreams have to wait. 

Measure No. 3: Build 2–3 Months of Crisis Savings 

We’ve been living in so-called “unprecedented times” since 2016. Things have been happening—a global pandemic, civil unrest, mass layoffs. You need to be prepared with an emergency fund because life will happen. It’s just a fact.  

I truly believe that any family can weather an emergency if they’re prepared. I always say that an emergency savings amount is dependent on your specific situation, but a good rule of thumb is to have 3-6 months of emergency savings. But first focus on building just 2-3 months.  

This money is not for investing and it’s not for spending. It’s to be your cushion if something like a layoff or emergency plumbing problem happens.  

Here’s what to focus on to build your crisis savings:  

• Calculate all your monthly expenses and multiply it by the number of months you want to be prepared for. That’s your goal. For example, if all your monthly expenses (mortgage/rent, utilities, gas, car payments, loan payments, entertainment, etc.) is $9,000 per month, and you want to save three months’ worth of expenses, your target is $27,000.  

• Choose a high-yield savings account to keep this money so you can earn money on your emergency savings. High-yield savings accounts offer APYs from 3% to 5%.  

• Do not touch this money unless it’s a true emergency. Online savings accounts that are separate from your checking account make it less tempting (and harder) to transfer money on a whim.  

Remember that having savings creates choices for you. And savings can turn emergencies into minor inconveniences. 

Measure No. 4: Start Retirement Savings at the Minimum Employer Match and Increase It Every Year 

Retirement shouldn’t be a luxury. But many people in our community believe investing is for “later” or “other people.”  

According to AARP, only 21 percent of Hispanic non-retirees say they are on track with their retirement savings. That’s compared to 40 percent of white respondents and 46 percent of Asian respondents.  

Here’s what to focus on to increase your retirement savings:  

• Start where you are—even if it’s small. Open a Roth IRA and start stashing away as much as possible every month.  

• If you have access to a workplace retirement plan (about 36 percent of Latinos have access to one, according to AARP), contribute at least enough to get the full employer match.  

• Aim to increase your contribution to your retirement accounts by 1 percent each year. 

• Focus on long-term growth and try not to get off track by watching the headlines.  

• Stay consistent during market ups and downs.  

Remember, wealth is built quietly, consistently, and over time. Your future deserves security and only your present self can provide that for them.  

Measure No. 5: Open a Child’s Future Savings Plan for Education or Training 

We don’t build wealth only for ourselves. We know this to be true, but it was recently confirmed through MassMutual research that found 49 percent of Latino households say that building generational wealth was their top financial objective.  

And one way to do that is to open a savings plan for a child’s education or training, which sends a powerful message to them that you believe in their future. And it can help the next generation avoid the fate of the 67 percent of Hispanic adults who graduate from college with education debt.  

Here’s what to keep in mind when opening a child’s education savings account:  

• College savings plans or training funds 

• Consistent small contributions 

• Involve children in the conversation 

• Teach belief before money 

Remember, this doesn’t have to be perfect. You just have to start. One degree can change a family, and not having to pay off debilitating student loan debt can open more opportunities for the next generation.  

Final Words of Wisdom  

A few weeks ago was the anniversary of the signing of the Treaty of Guadalupe Hidalgo, which officially ended the Mexican American War and made nearly 100,000 Mexican residents United States citizens. It also promised land to families in land grant agreements, which were eventually broken.  

The point in bringing that up is that we’re not new to broken promises and crisis. We haven’t always been dealt a “fair” hand in this country, but we always, always make the most of what we have.  

And these five measures can help us do just that—and effectively change lives and the trajectories of our families. They may not be huge things, but they’re how we move from survival to stability and eventually to thriving.  

Let’s not blame the past or the present, let’s do what we’ve always done: rise above and persist anyway.  

The Latino Economic Revolution starts in our homes, our habits, and our hearts.