Financial Education and Planning is the Key for Hispanics to attain The American Dream
January 23, 2014
For Hispanics, it appears that the definition of The American Dream is based on achieving financial security, so their families can get ahead – with a specific focus on paying off mortgages, getting out of credit card debt, paying for their children’s college educations and financially preparing for retirement. Although Hispanics are experiencing a cautious increase in optimism about the economy, when it comes to financial planning, their intentions and desires aren’t closely aligned with their actions. These are among the key findings of Massachusetts Mutual life Insurance Company’s (MassMutual) third biennial “State of the American Family Study,” which offers a broad snapshot of Americans’ financial views.
The study identified a foundational element that could bridge the gap between Hispanics’ desire to achieve financial security and taking the necessary steps to do so: the need for financial education and access to resources to help with proper planning.
Additional key findings include:
• Paying off debt. More than half (57 percent) of Hispanics prioritize paying off their mortgage as a top financial priority and nearly half (46 percent) prioritize getting out of credit card debt – significantly greater than the general population. Despite these higher-than-average initial efforts to achieve financial security, additional steps seem to be lacking. Almost half (43 percent) feel investing and financial planning should be a higher priority for them, and only 28 percent are confident selecting investment options to meet their goals.
• Focusing on a college education. Nearly half (49 percent) of Hispanics claim that paying for their children’s college education is something they insist on doing, yet only 31 percent rank savings/investing in their children’s college education as a top priority.
• Educating children about finances. Close to half (47 percent) of Hispanics are actively involved in educating children about finances and 79 percent recognize it is important in order to ensure their success in the future. Perhaps this emphasis is because 36 percent of adults wish their own parents had taught them more about money.
“This year’s State of the American Family study clearly shows that Hispanics continue to struggle with competing financial priorities, just like all other American families. Hispanic Americans are very concerned with improving their financial prospects and are proactively seeking ways to educate themselves, which is a positive sign,” said Chris Mendoza, Vice President of the U.S. Insurance Group at MassMutual. “We’re working harder to inform Hispanics about resources available that can help them put concrete financial plans in place and to adequately address their current and future needs.”
MassMutual offers the following tips to help Hispanic Americans ensure that their finances are on the right track:
Preparing for the Golden Years. The amount of income needed to maintain a standard of living in retirement varies from person to person and family to family. List all current and future expenses to see if you are saving enough right now. If not, talk to a financial professional who can create a plan.
Teaching the Future Generation. Setting children up for financial success is vital, yet many parents might not know where to start. Consider involving children in high-level family budgeting discussions and paying some of the monthly bills. Playing family board games or engaging in activities that have a monetary component also can help kids learn in a fun way.
Protecting Paychecks. For families, making sure that their income stream doesn’t stop coming in should be a priority, and disability income insurance may be a solution to address that need; it can help breadwinners meet future financial obligations – like paying electrical bills or, even more important, mortgages – if unable to work due to illness or injury.
Securing Families’ Financial Futures. Not only does life insurance provide financial protection if the worst were to happen, but some policies also accumulate cash value* – a living benefit that can be used for supplementing retirement income, funding a child’s education or emergencies.