Latina Financial Power: Five Pillars to Achieve Financial Freedom

Latinas are one of the most powerful women in the United States but it’s still an uphill battle when it comes to financial equality.  Latina entrepreneurs create businesses 50x more than the national average and Latinas college rates have skyrocketed over the last 20 years. In 2021, it was reported there were 3.5 million Latinas with bachelor’s degrees. However, despite these gains, a sobering reality remains: our wealth trajectory doesn’t match our educational and economic achievements. Latinas earn a mere 52 cents for every dollar earned by a white man, while Latinx families possess only 21 cents for every dollar of wealth held by white families. Although Latinas and our community wield immense economic power, the key now lies in enhancing our financial literacy and awareness. As we observe financial literacy month, let’s delve into five foundational pillars that can empower Latinas to improve their financial literacy and reclaim their financial power.

#1 Mind > Money 

Fostering a wealthy mindset is fundamental to achieving financial success. Many of us belong to the sandwich generation, which shapes our money perspectives as we navigate the pressures of providing for ourselves, our parents, and our children. This strain is just one of the daily anxieties we encounter. Through my work in financial education, I’ve witnessed how trauma intersects with money within our community, particularly impacting Latinas. This trauma often gives rise to limiting beliefs that hinder our potential for earning and overall prosperity. That’s why your mindset is paramount. By understanding your money wounds, financial triggers, and personal money narrative, you can address and overcome emotional barriers related to money. Trust me, you deserve all the wealth and abundance that life has to offer. 

#2 Spending Consciousness 

As we enter our next pillar, this one is the one that gets us all. Spending with intention. Spending with intention is about being mindful of our financial choices, ensuring they fall in line with our money goals. You know a money script we hear too often? “I didn’t have xyz growing up, so now I spend it on whatever I want.” That’s what I call being financially avoidant—filling a void from the past without thinking about our financial future. But, let me tell you when we have a spending plan, we’re taking control. It’s not about restricting ourselves like a diet; it’s about setting boundaries and intentions with our money. We’re making conscious choices about where every dollar goes. Some call it budgeting, but it’s more like setting personal financial boundaries. We’re setting goals and intentions with our spending. Spending isn’t bad—as long as it’s within our means and aligns with our priorities. This shift in mindset helps us stay aware of our spending habits and empowers us to take action with our dinero.

#3 Preparing for the “Uno nunca sabe” 

Emergency or cushion funds are key to protecting our financial futures. An emergency fund should hold 3-6 months of your living expenses saved into a high-yield savings account. Emergencies happen, it’s part of life but what we fail to realize is a credit card is NOT our emergency fund. Emergency funds are created to have immediate access to money to help you pay for any financial emergencies that arise that you were not expecting. They help build financial security, ensuring that if something were to happen you would have a cushion of money to lean on for a few months. Start with saving your first month of living expenses and build as you go. Como dice nuestra mami, “uno nunca sabe.”

#4 Know your Worth 

As Latinas, many of us have grown up hearing our parents emphasize the importance of gratitude for everything we have. While it’s essential to appreciate our jobs, food, and homes, it can sometimes feel like we’re expected to settle for what we’re given. This mindset needs to change within our community, especially considering the wage gap where Latinas earn just 52 cents for every dollar earned by white men. I want every Latina to recognize her worth because value translates into power. Here are three rules I follow when advocating for our worth:

Know your market value: Understand the average salary or rate for your job in your city or state.

Track your impact and achievements: Keep a record of all your accomplishments at work, including positive feedback from your team or management. Documenting your successes is crucial.

Prioritize yourself: Advocating for your worth can be challenging, as it may involve overcoming fears of rejection or lacking confidence. Remember, who will advocate for you if not yourself? Schedule regular meetings with your manager to discuss your progress and goals for financial or career advancement. You owe it to yourself to prioritize your needs and aspirations.

#5 Riqueza is created with Investing

Now the ultimate pillar, investing. We want to create generational wealth for ourselves and for our families, but saving isn’t going to be enough. This is where investing comes in. See, there is more to investing than just investing in self-care or in buying a home, there are other methods that can exponentially increase your wealth over time. The first step to accomplishing creating wealth is by first reducing your fear of investing. Investing at its core is taking a risk with your money and investing in an asset that you believe will multiply in value over time. Getting comfortable with risk is the key component to investing. There are three common methods to investing: real estate, businesses and the stock market. We are really good at investing in the first two, because we can actually see the asset, but I want to see our wealth exponentially grow and the method that is done is through investing in the stock market. This can be achieved with a 401(k) or 403(b) and/or through an investment retirement account (IRA) and for short-term goals you can use an individual brokerage account. These accounts hold your investments that can be in Stocks, Bonds, ETFs and Mutual Funds. Investing strategies vary person by person, but it’s important to know your risk tolerance and time horizon for your investments. With the power of time and compound interest a $500 monthly investment for over 30 years can turn into over a million dollars and this is how we can help our community bridge the wealth gap.

In conclusion, by embracing these five financial foundations, Latinas can empower themselves to regain control of their financial destinies and bridge the wealth gap within our community. We’ve explored the importance of cultivating a wealthy mindset, being mindful of our spending habits, establishing emergency funds, advocating for our worth, and harnessing the power of investing. Each pillar serves as a stepping stone towards financial empowerment and security.

As Latinas, we possess immense economic power and potential. It’s time to harness that power by equipping ourselves with the knowledge and tools to navigate the financial landscape effectively. By taking control of our finances, we not only secure our own futures but also pave the way for future generations to thrive.

First Generation, Queer Latina Lea Landaverde is the founder of The Riqueza Collective, a holistic financial services company, and the of host of Mi Riqueza Podcast.