How first-generation Latino Americans are trying to close the wealth gap

Total U.S. household wealth has trended upward over the last 15 years or so, but there is still great inequality along racial lines. According to federal data, the typical white family has almost five times the wealth of the typical Hispanic family. John Yang speaks with author Giovanna González to learn more about how first- and second-generation Latino Americans are trying to close that gap.

Read the Full Transcript

John Yang: Rising stock in real estate markets have helped send total U.S. household wealth trending upward over the last 15 years or so, but there’s still great inequality along racial lines. According to the latest Federal Reserve data, the typical white family has more than six times the wealth of the typical black family and almost five times the wealth of the typical Hispanic family. For National Hispanic Heritage Month, which runs through October 15, we look at how first and second generation Latino Americans are trying to close that gap. Giovanna Gonzalez is author of “Culture and Cash: Lessons from the First Gen Mentor for Managing Finances and Cultural Expectations.” Giovanna, are there challenges to first and second generation Latino Americans. Giovanna Gonzalez, Author, “Cultura and Cash”: Oh, many, I like to call them that we have a different starting line, and that’s because we don’t get any sort of basics on money management at home. You know, of course, stuff isn’t taught to us at school, but some of our peers get to benefit from parents maybe teaching them what a checking account is how credit works. As children of immigrants, our parents just try and survive in a new country. So we don’t typically get any exposure to any sort of money talk. And on top of that, we don’t get to benefit from generational wealth. Again, our parents come here seeking a better life for us all. So they really come here with nothing. And on top of that, we have the additional i. Responsibilities of feeling like our parents caretakers. A lot of us feel like our parents retirement plan or that we have to provide a monthly allowance for them to stay afloat. John Yang: You’re a financial educator. Are there things you wish someone had told you when you were graduating college and entering the working world? Giovanna Gonzalez: Oh, absolutely. And that would be, invest aggressively in your 401(k), or your 403(b), whatever you have at work that’s to help you have a full retirement in the future. Be aggressive with paying off your debt. I was very passive with my debt. I just thought as long as I’d paid the minimum balance on my student loans and my credit cards, I was good. But after learning more about financial literacy, I learned that it’s going to take way longer to pay off debt that way. John Yang: Are those some of the most common pitfalls you see, or most common mistakes you see among young Latinos? Giovanna Gonzalez: Yeah, as well as maybe not putting themselves on a budget. I used to think that as my career would escalate, so would my income and money would just kind of sort itself out. But after learning financial literacy, I learned that you have to have a roadmap for what you want your money to do for you, and it’s hard to do that if you’re just kind of not aware of what your spending goals are. John Yang: In your advice and in your writings, you talk about embracing bicultural identity. What do you mean by that? Giovanna Gonzalez: When I started my financial literacy journey, the only access that I had to personal finance books were mostly written by white male authors. Of course, there were the Jean Chatzky, the Susie Ormans, which were phenomenal, and I learned a lot from these books. But what was missing was how my Latino handles money, which is very different than the typical white middle class American. Most Latin American countries operate in what’s called a collectivist sort of society, which means that we sacrifice ourselves for the group’s betterment. If you need help, the first takeaway you go to is family, where in America it’s very individualistic, where it’s very much every man for itself, of course, by the bootstraps. If you have any sort of money challenges, charge on a credit card, you don’t go and tell the people about it. So when I went into the real world, aka handling money with my family using these white principles, there was that culture clash. So I had to learn as a bicultural Latina and Mexican American, I have to have a blend of those values that works for me. John Yang: In addition to these individual actions, saving, investing in a retirement fund, are there structural problems that are also keep Latinos from building wealth? Giovanna Gonzalez: Absolutely, especially the financial planning world. It’s set up in a way where you want to cater to the riches. So if Latinos don’t have a large wealth in their name, that doesn’t make them as attractive as a client, right? So it’s easy for them to feel overlooked and to be passed up for other wealthier clients. John Yang: You say, how many of the advice books are written by white men. Do you think you have a special connection to the Latino community? Giovanna Gonzalez: Absolutely, I have my lived experience. I have a lot of common sayings that we say in Spanish that really connect with our culture and my ideal reader. My book came out in January, and it already has over 205 star Amazon reviews, most of them saying, I’ve tried reading other money books, but I couldn’t relate to them. This one, I finally understood. It spoke to me in terms that I can understand, and I’m so excited to get started on my journey. John Yang: You also talk about resiliency. Explain that. Giovanna Gonzalez: Yeah, resiliency runs through our veins as the children of immigrants, you know, again, we don’t really have much of a leg up in life. We don’t have generational wealth, even generational knowledge that some middle class families get to benefit from being in this country several centuries, like just knowing how financial aid works, knowing how, again, a credit card works, these are all things that our parents are struggling to learn as they’re starting to set roots in this country. So we have to learn to be resilient and do a lot of firsts on our own right. To be the first in our family to go to college, be the first in our family to work in corporate spaces, be the first in our family to learn how to accumulate wealth. A lot of us were translators as children for our parents who didn’t speak the language, either at doctor’s appointments or school meetings. John Yang: Giovanna Gonzalez, thank you very much. Giovanna Gonzalez: Thanks for having me.