You've said that Latinos start from an uneven playing field when it comes to financial literacy. Why?
There are a couple of things that put Latinos at a disadvantage. One of them is cultural. The relationship that consumers have with financial institutions in Latin America is very different than the relationship people have here. Some immigrants may have had their bank accounts nationalized by the government. That stays with them. Others have grown accustomed to operating in cash because of lack of access to traditional institutions, as in the case of Argentina.
Secondly, there are literally thousands of different financial products in the U.S., ranging from credit cards, car loans, home loans, and adjustable-rate mortgages, which in Latin America you have only one option. If you don't have the skills or information, how can you make an informed decision?
What's the main obstacle that keeps Latinos from learning how to manage their money responsibly?
There's a lack of good financial information in Spanish. But there's also a competition for attention. When you get home from work, do you want to hear about how to negotiate your credit-card debt? Or do you want watch the latest sports scores?
The difference is that Latino communities are already coming from a financial disadvantage. So when you're starting from a base of zero, or a negative base, you have to work two or three times as hard to actually start saving money. But we're not there yet.
What's the most common financial mistake that Latinos are making?
I've seen a lot of people allow their family and friends o borrow their credit and good name. It's very common to see a person who has worked hard for 30 years put their credit on the line so a relative can buy a home. The house is now worth half of what's owed, and the relative can't pay. Your good name is ruined. I always tell people, "No seas presta nombre para nadie" — "Don't loan your name to anyone." Those things never work out.
With Latinos starting small businesses at twice the rate as the overall population, what tips can you offer them?
This means there are more people in our community that are withdrawing money from their saving accounts, borrowing money from family and friends, using money from their credit cards, and getting a mortgage or second mortgage to start a business. Get a good financial base before you spend your first dollar. Proper education can minimize the risk of failure.
What five financial tips can you give to second-generation Latinos? Many are bilingual and don't share the same fear of banks as their foreign-born parents.
- Take personal accountability. You have to educate yourself about your personal finances. There are many resources at minimal, or no, cost available to you in English.
- Avoid getting into debt early. Avoid those college credit cards, as well as taking on too much student-loan debt.
- If you're young, or returning to school for more education, focus on a practical career. It's great if you want to study contemporary French literature — that's wonderful. But you can do that as a hobby. If you want a job and a career that's going to pay you, study something like nursing or accounting. We need more nurses in this country.
- Spend less than you make. It sounds simple but most people don't do it. They spend more, then plug the difference with credit cards.
- Push yourself as hard as you can. You can improve your financial situation if you spend time planning for your future. There are no secrets. There are no tricks. It's just about being disciplined.