Why not Talk About Money?

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With foreclosures involving Latino home owners the highest in the nation, with 35 per cent of Hispanics aged between 16 and 19 unemployed, and with traditional banking and financial services scarce in most Latino neighborhoods, the push is on to boost financial literacy in America’s fastest growing minority group.

It is a complex challenge. The needs of Latinos who have lived in the United States for generations are different than the needs of both documented and undocumented immigrants neither of which may have good English language skills. Today, one in six US residents – 50.5 million people – are Latinos. Twenty-three per cent of people under the age of 18 are Latino, according to the Pew Hispanic Center.

Younger Hispanics with degrees are more aware of the importance of saving for retirement than their parents, who may have saved little or nothing to help put their children through college. There is an urgent need for Hispanic students to enter financial services fields – to be personal financial advisers, insurance agents, and bankers – because studies show that most Latinos, immigrant and non-immigrant, feel more comfortable trusting advice from a Latino professional and if that person is bilingual and motivated to provide services in the Latino community, so much the better.

Financial literacy programs are underway in small towns where the Latino population may only number a few hundred, and they are also being offered in major cities or regions where Hispanics may be the majority population, numbering in the millions.

For example, in Mankato, Minnesota, population 39,000, there are only 900 Latinos and they are mostly employed in manufacturing. Most are immigrants, according to Antonio Alba, an immigrant himself from Chihuahua, Mexico, who is an extension educator for a University of Minnesota financial literacy program aimed at Latinos http://www.extension.umn.edu/Finanza

“I have 300 families a year now coming to our workshops. We make presentations in libraries, in churches, in coordination with ESL (English as a Second Language) programs. Non-profits are involved too. We have designed our own free, basic financial course in Spanish to help people who usually know nothing about money. But they want to learn,” Alba said.

Marlene Alvarez, who at one time was an undocumented immigrant from El Salvador, is teaching financial literacy with the help of grants and other assistance from NCLR, HUD and Union Bank, as a staff member for the Los Angeles-based New Economics For Women. Last year she taught 16 six-hour workshops and graduated 381 immigrant women.

“A lot of Latinas don’t know how to manage money,” Alvarez said. “If their husbands are working, they don’t know how to survive if the husband is gone. I teach them how to develop a credit history, and also to be self sufficient.”

Alvarez has huge credibility among the women she serves. When she came to the USA in 1980 at the age of 18, she did not speak English. She had been working since she was 9. She got a job in Los Angeles as a machine operator for a Chinese-owned sewing factory and, after her mother told her “save your money and buy a piece of land” she did just that, squirreling away $20,000, enough to now own two houses.

Also working in Los Angeles is Nelson Santiago from consumer-action.org.

Santiago is involved in distributing financial literacy educational material designed in the organization’s Washington DC offices. In the last 10 years, the brochures and other material have been given to more than 8,000 non-profits and public service entities, he said. The material is printed in Spanish, Chinese, Korean, Vietnamese and English, ideal for multicultural Los Angeles.

“We try to cover everything” in presentations, he said, “including banking, building credit, starting a micro business, and bankruptcy. We do this in such a way that the information can be viewed by community groups and our clients can take steps to improve their financial situation. We encourage them to save. Once they have been saving money for 3 months we can show them how to have a savings account,” Santiago concluded.

Linda Davis-Demas is Director of Housing and Financial Literacy for the Consumer Credit Counseling Service of Greater Dallas. She is a financial planning graduate of Florida State University.

“Many Latino families are not aware of financial matters,” David-Demas said. “There is no one (personal financial advisers) to represent them. Where they come from, there is little faith in banking. Their legal status (as immigrants) here may be questionable. We have clients who obtain loans, but not necessarily with a legal ID so that now they are getting questions from the IRS. They don’t know who to turn to for advice and often the person giving advice is not well informed. It is often the blind leading the blind. Financial planners are a foreign concept,” she said. Davis-Demas helps families understand the financial system – opportunities and obligations – in the USA, but often her services are not an easy sell.

“Their primary reason for coming to the US is to improve their situation for themselves or their families. When you try to take a look at their paperwork, they may not have it. They are not used to people like me asking questions about their money. They tell you they have money, but it is not in a financial institution where I can track it. They need the money to buy a business or a house. They say, ‘Oh, I have the money. I have $20,000, I have $30,000,’ I ask, where is that money? How quickly can you get it? They say, ‘Oh, I dispersed it among my family members, for them to use or invest.’”

Davis-Demas said that “trust” is essential. “It is all about building that relationship,” she said. “Once you have that, they open up. Quite often those families don’t care about their needs. It is the extended family they care about. It’s our culture,” she concluded.

In Orlando, Florida, Latino Leadership is doing financial literacy work, especially among young people. Marytza Sanz, founder and CEO, said one effort, aided by banks and LULAC, started two years ago with high school students. “Young people don’t understand how credit will affect their lives,” Sanz said. “Once they discover this they realize that this is America. You can do anything here.”

The idea is that students who attend seminars become teachers too. We want them to take that information and pass it on to their classmates and parents.”  Sometimes, Sanz said, she is startled by the lack of knowledge young people have about how to handle money.

“There was this 18-year old boy, a high school graduate, she recalled. I said, ‘Alan. I need some help. Go to the bank and make a deposit for Latino Leadership.’ I showed him a check. ‘This is the money amount. Give it to the bank with a deposit slip.’ He took his car and he dropped the check off at the drive-in without obtaining a receipt. I said, ‘Alan. Where is the receipt? I have to give the receipt to my accountant.’  Our kids are the future. How can they get ahead if they don’t know about money or about basic financial services? We had the sheriff come out here to tell the kids that he would not hire people with credit problems. That was a good learning experience for them: bad credit, no job!”  Sanz said.

Brent Neiser is the Denver-based senior director of Strategic Programs and Alliances for the National Endowment for Financial Education. His organization funded a study of Latino pensions and retirement in 2008 for the University of Notre Dame Center for Migration and Border Studies (http://latinostudies.nd.edu/cmbs/).

Recently, Neiser said, NEFE has been working with NCLR on possible financial consequences of immigration reform. He said those consequences need to be explained to undocumented immigrants who may have bought homes or business properties in the United States.

Neiser said Latino immigrants are especially vulnerable in the housing crisis. “Let’s say someone owns a home and then they need to re-orient their status under a new statute. Would they now have to sell that house or that business, if they had to return to their home country in order to formally apply for legal residency here? Another example, if they are doing seasonal work they may not be connected to benefits. They don’t have a financial planner who can tell them how to build wealth. They may be borrowing equity on that fixer upper they own. They don’t understand how to use credit, or how to make proper use of the tax system or financial products.”

Paul Brinkley-Rogers is a former reporter forNewsweek, The Miami Herald, The Arizona Republic, and the Phoenix-based Spanish language newspaper La Voz. He was a member of The Miami Herald’s reporting team that earned a Pulitzer Prize for coverage of the highly emotional child custody dispute in 2001 over Elian Gonzalez, the little boy who survived the sinking of the boat bringing him and his mother from Cuba to seek a new life in the United States. Paul won the Overseas Press Club’s Malcolm Forbes award in 2002 for writing about the economic and political turmoil in Argentina.

Latino Certified Financial Planners, A Rare Breed

Five years ago, a small team of Texas Tech University recruiters flew to the Rio Grande Valley, TX – population 1.13 million, 90 per cent Hispanic – to find Latino students interested in earning degrees in personal financial planning. It was a field that did not attract many Latino students even though the rapidly changing demographics of Texas showed that 38 per cent of the state’s 25 million people were Hispanic. Tejanos spent $154 billion in 2007 but placed dead last among all ethnic groups when it came to savings, using bank services and buying insurance.

The TTU recruiters came across Rosa Ybarra, daughter of a poor farming family from Edinburg, the first person in her family to attend college. She had completed her undergraduate degree in only 2 ½ years at a college in Brownsville. One year later she earned a master’s degree from Texas Tech.

“When I decided to continue with my education and go for a BA,” said the 22-year-old newly minted financial planner, it took a while to convince her family. “They didn’t understand why I wanted to go for a master’s degree. They were not able to wrap their minds around it. I assured them that everything I do is to represent the family,” she said. “For the first two months I was gone from my parent’s home so they were hesitant to give their approval. But when I got back home I gave them advice on their income tax return and on buying insurance.  Even my high school teacher asked me about his taxes. Now people there understand the value of what I am doing,” Ybarra concluded.

John Gilliam, associate professor at TTU’s Division of Personal Financial Planning (http://www.depts.ttu.edu/pfp/) – one of the nation’s premier programs - led that recruiting team. Earlier in his career, he had recruited young African-Americans, using a $260,000 grant from ING. Five years ago, the university’s budget for finding Latinos was only $5,000. He put it to good use immediately.

Gilliam, who was raised near Lubbock where TTU is located, said he was aware of the rapid growth of the Latino community. There was an urgent need, he said, for financial planners who were Hispanic and bilingual, but of the 50 students then in the master’s program only three were Latinos. There are now about 110 students in the graduate school program and 15 are Latinos.

“This is a no brainer,” Gilliam said. “Look at changes in the population of Texas. Look at the entire Southwest. Gilliam, who grew up in the 1960s, said he has watched the Hispanic population of north Texas change from a few migrant farm workers to “people in every position in life, including doctors and lawyers and businessmen. That population may have more financial knowledge, but culturally it is still distinct. Different ethnic groups have different attitudes toward money,” he said. It helps, Gilliam said, “if professionals from the Latino culture serve Latinos.”

Also on that recruiting drive was Victor Garza, a TTU financial planning graduate who is now 29 and a board member of the Dallas chapter of the national Financial Planning Association.

Garza is in the business. But he also is on a mission. In the last three years, he said, he has done more than 1,000 seminars for Latino residents of Texas. Like Gilliam and Ybarra, he says the need for financial literacy among Hispanics of all income groups is acute.

When Gilliam led that recruiting trip, Garza was the only Hispanic majoring in personal financial planning at TTU. “John promoted the program and I was the example. Almost no one in that part of south Texas knew what a financial adviser did. It is a relatively new profession. Thirty years ago, white or black, you had to explain the job. Nowadays you don’t have to explain it to Anglos. But in the Hispanic community, they still don’t know,” Garza said.

Garza began giving financial literacy seminars “in the poor barrios of Dallas” three years ago. “There is a big movement among the community to get some financial education: how savings accounts work, how to balance a checkbook, how to make investments,” he said.

 The “Bank on Dallas” financial literacy program started last year by banks also includes incentives to open checking and savings accounts. However, in Texas, with its large Latino population, only one per cent of Certified Financial Planners are Hispanic. Three per cent of CFPs are African American.

CFPs have the credentials to start their own businesses. Rosa Ybarra has chosen that route. She is an intern at a financial planning firm in Dallas. But she has a plan: she will return to the Rio Grande Valley as a CFP to open her own business in about ten years.

“There is a real need in the Valley for professional financial advice. More and more people are attending college. But the fact is that most of them are not financially literate. We weren’t raised to save for retirement. People are not familiar with the 401k or retirement accounts. If they have money they’ll run right out and spend it. Money is a short-term thing,” she said.

By Ben Garcia

IN THIS ISSUE...  

• Why not Talk About Money? 
• Financial Literacy: a Real Vulnerability for the Latino Community.
• Latino Certified Financial Planners, A Rare Breed.  
• For Families Facing a Tough Economy, Financial Planning is far From Their Mind.
• Innocation in Financial Literacy Programs. 
 

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