Ways to Creating Generational Wealth in the Latino Community

There are many different avenues that someone can take when wanting to build wealth for themselves and the coming generations. Someone does not need to be born into a position of financial privilege to reap the benefits of what creating personal and later generational wealth can bring.  

Generational wealth is not only addressing the transferable cash assets that can move from one generation of a family to the next but also includes things such as estates, items of value such as collectibles, vehicles, and business ownership. This push to create generational wealth is also the result of the wealth gap. 

According to investopedia the wealth gap is the “disparity results from differences in income and in the historical accumulation of assets across generations.” 

This narrative is also analyzed in the difference in household incomes. In 2020 Hispanic/Latino median was set earning $55,321 whereas White Non-Hispanic median was at $74,921 as reported by the U.S. Department of Commerce. This information along with the ever-increasing cost of living have resulted in many people looking for new ways to save money and provide for their future generations. 

Second, thing to note is the importance of financial education. The more fiscally responsible an individual is decreases their chances of being in debt or falling into bad credit. This practice comes from areas like managing credit card payments, budgeting, and investing. 

Here are some helpful tips to use when trying to build generational wealth for your family: 

Financial Literacy 

Before looking into other ways of creating both personal and generational wealth to have a base in financial literacy is key to making any of the other areas mentioned successful. 

Talk to a Financial Advisor 

Not sure how to get started? Contacting a reputable financial advisor in your area can be a good first step to take when starting your journey to creating generational wealth. They will be knowledgeable to take into account your starting place and your end goals to create a plan to best fit your situation.

Here are some free resources to check out: 

Alondra Barajas on TikTok @alondrabarajasbenefites [Se Habla Español] Alondra posts helpful TikTok videos covering a range of financial information.

Hispanic Wealth Project https://hispanicwealthproject.org/ HWP mission is to work on closing the wealth gap problem in America. Look under the resource tab to find information covering various FAQs and Tips to get started. 

Jannese Torres-Rodriguez on her Podcast “Yo Quiero Dinero” on her website https://yoquierodineropodcast.com/ Her podcast covers a range of financial advice and education along with interviews with other Latinos in the field of financial management. 

Managing Debt

When taking out loans, bring the long-term picture into view. Loans can be a necessary step to take when trying to build personal wealth and later generational wealth. 

One potential investment into education can aid in opportunities and better career prospects which would make the expenses of student loans something to take into account. 

In 2019, the average total education loan debt for Hispanic Americans was $30,890 according to the Federal Reserve. 

Ask yourself questions like is this loan a necessary cost to financially take? How will the interest affect my payments in the future? 

Create a Passive Income 

This means that you have money coming in without you doing the traditional means of working for it. In a sense money making itself. Investing in ventures that can yield a high compounding rate of return. This can work in both the short and long terms.  

Investments 

Depending on the type of investment someone is looking for they can vary greatly from each other. Stocks can be a daunting investment to those that are not familiar with how the stock market works in compounding and creating a passive income. With further education and understanding of types of compounding methods this can be a good introduction into building wealth. 

Estate Planning  

Many people do not consider what type of management will happen with their estate when they are gone. This pre-planning is a great way to ensure the passage of this wealth. The wishes of the original estate owner can be respected and insured that they are divided according to them. This is usually done through the creation of a will.  

Another reason that this can be vital to creating generational wealth is that it prevents mismanagement of the estates and other assets. For instance, should the estate owner pass without a will the dividing of the estate could be done by the state rather than the family. This outside handling could allow for fees to be placed on the service cost done by the outside source, meaning that less of the estate would pass to the next generation.