Like many foreign-born Latinas, it was not until I joined corporate America that I learned that to achieve financial success I would have to shed certain beliefs that were rooted in my Latin culture. My husband, a gringuito who works in banking, has been a tremendous help in overcoming some of the costumbres (habits) that I grew up with. We have taught our kids these lessons at an early age.
Louis Barajas, one of the country’s top 100 financial planners and an acclaimed author, features some of the most critical cultural “potholes” that prevent Latinos from making the most of their money in his book The Latino Journey to Financial Greatness. Here is a list of some of the most critical mistakes:
- Too much reliance on a “cash” culture
- Not understanding the importance of saving and the power on investing
- Providing financial support for their children way into adulthood
- Approaching close friends and family rather than experts for business advice
- Considering price or a deal more important than competency
- Co-signing loans for family members who have bad credit
- Being embarrassed to ask questions because we do not want to look foolish or to be a bother
- Financing a car or house without understanding or reading the fine print of the loan agreements
Here are the most valuable lessons I have learned and passed on to my kids:
Start Building Credit as Soon as Your Kids Turn 18: There are several ways you can help your kids get a loan or credit but make sure you educate them first.
Stay Out of Debt and Do Not Live above Your Means: Paying off our credit cards at the end of each month has always been a must. As important, is avoiding the temptation of indulging in expenses that you cannot afford and will impact your ability to save.
Set Money Aside for a Rainy Day: How many family members, friends or business owners are suffering because of the unforeseen impact of the pandemic? Thank goodness we had money set aside for las vacas flacas (“the skinny cows” or lean times).
Put Money Away for Your Future: Both of my kids recently started working and they are already putting money aside in a 401k.
Blood Is Not Always Thicker Than Water: do not go into business or enter a deal with familia or close friends.
Be Incredibly Careful about Whom You Take Advice From: Latinos tend to value the opinions of friends and family over outsiders. This does not mean that you discard their opinions but make sure that you seek advice from experts.
I know firsthand how challenging it is to pull away from our Latin roots, but I have learned that in certain areas, such as finances and career, we need to do it to succeed. In other areas – as a mother, a daughter, a friend, and a lover – I draw upon my Latin roots and value system to be the best person that I can be.