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Gaining financial literacy can help Hispanics save and invest money

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Whether it’s retirement savings or wealth building, Hispanics are lagging behind. They may also be moving away from traditional bank accounts.

Several reports highlight the gaps, including one of the St. Louis Federal Reserve It found that Hispanic and Latin families had only $ 38,000 of median wealth in 2019, at 21 cents per dollar of white family wealth.

Meanwhile, more than two-thirds of Hispanic households save nothing through employer-sponsored programs, such as 401 (k) s and only 8% report having a personal retirement account or similar program, a report by Morning star Found. More than 12% of Hispanic households do not have bank accounts, according to Federal Deposit Insurance Corp.

While the issue of the wealth gap needs to be addressed, achieving financial literacy can lead a long way toward financial stability, suggests Inli Espinal, Director of Educational Information at Next-generation personal finance.

Hispanics have lower levels of financial literacy than whites, according to TIAA-GFLEC Personal Finance Index. Hispanics answered 41% of the questions correctly, compared to 55% of whites.

“For my parents, and for many other Spanish-speaking immigrants, a lack of financial literacy results in thin credit files with poor credit scores / no knowledge or ownership of retirement or brokerage accounts, and frustration from traditional banking,” he said. Espinal, whose parents immigrated to the United States from the Dominican Republic.

The Covid-19 epidemic has made it clear that Latino and Hispanic workers are over-represented in low-wage work environments, she noted. When limited funds are divided in many ways, people are forced to prioritize short-term financial needs over long-term goals, she said.

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“The result is repeated cycles of financial struggle,” said Espinal, a member of CNBC’s Financial Welfare Board.

“Learning about Roth Custody IRAs and custody brokerage accounts for Hispanic and Latin teens, and helping families understand the benefits of starting early with 529 college savings programs are incredibly powerful ways to change the narrative.”

To that end, CNBC Invest in You is partnering with Telemundo to bring Spanish-speaking Americans our Money 101 newsletter in Spanish. (Click here to sign up for Dinero 101.)

The newsletter, senior CNBC correspondent for personal finance, Sharon Apperson, is an 8-week course in financial literacy, and includes help with budget preparation, retirement savings and the creation of an emergency fund. By enrolling in the course, you will also receive bonus newsletters that will help you navigate financial concerns throughout the plague.

Not only will you accumulate financial knowledge, you can use the information to open conversations between family members.

“Culturally, money calls are something that most Latin families do not have,” said Luis Brahs, a certified financial planner who works with the Latin community in East Los Angeles.

He urges people to read and talk if they do not understand something.

“It’s about not being ashamed, not feeling guilty, not feeling embarrassed, not being ashamed to say ‘I do not understand, can you please explain it to me,'” he said.

Sign up: Dinero 101 is an 8-week learning course for financial freedom, delivered weekly to your inbox (Spanish version), or if you would like to receive the English version of Money 101, click here.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

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