When you’re trying to get your money right, it’s often hard to look down the path and see where your efforts will lead you. Building wealth takes time, and we move through different phases.Very few of us wake up one morning to $1 million in our bank accounts. Instead, we save our first $1000, then our first $10,000, and we build, gaining more assets as we go. As Latinas, many of us probably didn’t grow up seeing wealth building habits and instead learned that keeping cash under the mattress was the way to go. But now as adults navigating our finances can be intimidating and every stage brings new challenges that can feel overwhelming.
And I always find it easier to do something after I see someone else doing it, or at least trying. That’s why I like to share about my money dates with my partner, or how I’m working toward financial independence over on Instagram. I firmly believe that financial community is crucial to financial success, and talking about how we are earning more, saving more, and building wealth helps us all win. For Latinas starting their financial journey, finding community online or in-person can truly help you improve financial literacy and grow your money.
So today, I wanted to highlight three different Latinas at three different stages of their finances, and share how they are managing their dinero to get to the next stage. To see these women on different stages building their wealth is an important reminder that it’s possible regardless of where you’re at.
It can be hard to try and forge a path in a direction when you don’t know what the path leads to. If you’ve never met a millionaire, or even someone worth $200k, you don’t know the tools needed to manage that kind of money. The tools you need when you have $100 in your savings versus when you have $100k invested are different. Read on to learn more about Latinas at different levels of wealth and what tools they used to make major money moves.
Beginner Stage: How to Begin Budgeting and Paying Off Debt
Teresa “Tery” Lamertt, 36, is a Licensed Mental Health Counselor and Director, living in Miami and currently working two full time jobs. She is Cuban-American and uses some of her income to support her parents. She is currently saving money, but like most money beginners, feels she is inconsistent with budgeting and is working to pay off debt.
“I feel that I am very much in the beginning of my journey,” she tells HipLatina. She had crossed off some big financial wins: paid off all of her consumer debt, upped her 403B retirement contributions and had money in savings. But after some life twists, Tery says that now she’s dealing with debt and struggles with budgeting.
“I am now in a little consumer debt again, can’t budget for the life of me and opened an IRA but have not contributed anything to it. I met with a financial person that told me that at my current rate of spending/saving/retirement accounts I would need to work until I was 75 and that made me very sad as that is the situation my parents are currently in and why me and my sister have to help them every month.”
Many can relate to this yo-yo money experience especially in the current economy with skyrocketing prices. Sometimes it feels like one step forward, and one step back, especially when we’re working on multiple goals, or supporting family.
Tery says her ultimate goal “is to be comfortable for retirement and own a home without it meaning all my financial goals are ruined.” That is the goal for so many of us: true financial peace and comfort.
To get back on track, she uses Mint, a free budgeting app to track her expenses. She also says she uses “automation to different accounts so I don’t see the money I save. The mint I’ve used from the beginning but am not always consistent with it and the automation is a newer thing that has been helpful.”
To build her long term financial security for retirement, she shares that she has two clear goals: “The next big milestone would be a tie between owning a home and maxing out my IRA.” Both of these goals align with her long term vision of having a solid retirement nest egg.
If you’re in the beginner stages: Work on finding a budgeting system that you feel confident about. The first true step to financial health is controlling the flow of cash into and out of your life. Get a clear spending plan in place that helps you put money towards any debt you have, while also building an emergency fund for those unexpected life moments.
Intermediate Stage: Investing and Early Retirement Planning
Karen Carranza, 29, describes herself as comfortable with money, and when I reached out to her for this article she was on vacation in Italy. However, she knows she has more to do when it comes to reaching financial freedom. As a nonprofit worker in Los Angeles, she is making every dollar work towards her financial goals.
“I have all most of the typical financial basis covered such as a fully funded emergency fund, maximizing most tax advantage accounts, having a checking account cushion and being debt free,” she tells HipLatina.
Karen has all the first steps done: debt free, emergency fund in place, and currently investing. Karen also has a partner with whom she shares living costs, even though they have different approaches to money.
She shares that some of the financial tools she uses includes setting quarterly money goals discussesions with her partner who is a data analyst. They work on updating their “bare bones budget” on how much they’ll spend and save annually. She also shares that they have automatic transfers to savings/investments and they use autopay for their bills.
“For me personally, I like to do a zero based budgeting on a regular notebook to keep track of spending and keep notes on why that month was either high or low spend. For my partner, he just needs two times our monthly expenses in his checking account and he’s good since he doesn’t like to budget. In the beginning of my journey, I just used a notebook and pen to do the zero based budgeting and didn’t include my partner which is essential for me now.”
Karen would like to be work optional (meaning she doesn’t HAVE to go into work and can still pay all her bills) by 45. She also, like a lot of Latinas, takes her family into her financial plan.
“I would ultimately like to be work optional by 45 by having at least $1.5 million invested. But I’m not killing it to the point where I can retire my family which would be the dream. But as a first gen Mexican American working at a non-profit, I would say I am great with money.”
To help provide that family support, Karen says her “next big milestone for me is to earn a much higher income. I earn a decent salary a little under $100k. But if I’m killing it with this income, I can only imagine killing it as a really high earner.”
If you’re in the intermediate stage: focus on increasing and diversifying your assets. Something Karen has not done yet is invest outside of the stock market. Diversity can offer protection and the chance for greater growth!
Advanced Dinero: Saving and Maintaining Millions
Stefanie Gonzales is a 39 year old Mexican American currently living in Portugal. With a net worth of $1.3 million, her financial focus is now on what she calls the “seasoned stage.” Stefanie and her husband have been investors for over 16 years and it’s clearly paid off.
“I am our family Chief Financial Officer, i.e. we do not have a financial advisor,” she tells HipLatina. We have a lot of clarity on what our current investments afford us in terms of active income independence, as well as what it will take to get us to our current end goal which is to have at least $1.8M invested plus passive income from our businesses by age 45.”
So how does Stefanie manage money now that’s she’s officially a millionaire? She currently uses a range of tools to run her family’s Financial Management System (FMS). “These tools allow me to look at both the macro and micro elements of our money and over time have become more automated. I suggest automation to every single woman, because let’s be honest, we are all busy.”
If you’re in the advanced stage: Here is a more detailed breakdown of how she approaches her money management:
Macro/Annual: The Women’s Wealth Effect Independence Planner. She developed it to help her plan and organize her family’s finances for the next five, ten, and even thirty years.
Macro/Frequent: Personal Capital, now Empower app which allows her to check in on their net-worth in real time. “I am a visual person & love this apps interface.
Execution & Fund Research: Vanguard and Fidelity: “There are pros and cons to both, but as you accumulate more and more wealth, it’s helpful to have your investments in a [minimum] of two providers so that you are more protected via regulations.”
Micro/every day: Mint to automate her budget and spending details which allows her to do more of a “deep dive” into her money. “It’s also helpful when you and your partner what to actively engage in money conversations. Transparency is super helpful to keep you both accountable.”
The path toward becoming a millionaire is paved with organization and consistency and though it’s not an immediate achievement, it’s one that can only happen if you allow for the take it’ll take and stick with it. Her number piece of advice for Latinas is to take that first step: “I would tell Latinas in earlier stages that time is their biggest friend and starting is time’s BFF.”
Latinas now make up the second-largest group of women workers in the U.S. after white women. There are 12.8 million Latinas in the labor force, representing slightly more than 17 percent of all women in the labor force today, the Joint Economic Committee reported. Yet, Latinxs as a whole represent only 7 percent of the total millionaire population nationwide in comparison to 76 percent who are white. So how can Latinas begin to bridge the gap? Stefanie breaks down the approach into four categories: career, wealth, health, and community.
CAREER: Get serious about acquiring skills and growing your income because the goal isn’t to work until you’re 65 even though that’s always been the standard.
WEALTH: Start learning how to activate your income through investing in a way that you can understand and confidently take action. Every year in your 20s is a major catalyst to setting up your financial future and if you are later in the game, the best day to start is today. A good place to start is a 401K if you have access to one or a Roth IRA but there are various investment options to look into to find the right one for you.
HEALTH: Honor your body and intuition and recognize that often the financial journey IS overwhelming no matter where you’re at or what you know so give yourself grace.
COMMUNITY: Surround yourself with people who want to see you win and support you through your financial process even if that means you won’t always be able to go out or spend like you used to. “When you win, we all win!” Stefanie says.