Personal finance is a popular topic in the media with stories often covering consumer spending habits and/or offering ways that individuals can improve their own finances. A recent look into consumer spending habits in light of increasing demographic shifts produced some interesting statistics of one particular group: Hispanics.
While much of the media’s focus is often on Millennials and their increasing influence in the economy, the growing population of Hispanics could have an even greater impact. In fact, the increase in spending among Hispanics will likely exceed that of Millennials and Baby Boomers combined over the next five years.
With that said, the Hispanic population is poised to take 1.4 percent incrementally of the consumer wallet – equating to approximately 13 trillion dollars. As the spending shift occurs, so will the sectors that it will impact such as in food and retail. Millennials tend to spend more of their income on dining out. Meanwhile, Hispanics prefer to devote more of their income toward food consumed at home.
Interestingly, the apparel sector is one area where Hispanics and Millennials intersect. Spending allocated to apparel has been declining on the whole in the last decade due to apparel price deflation. However, both of these growing demographic groups are allocating a greater proportion of income to apparel.
Though these findings are enlightening, I can’t help to think about the flip side. With all the growth in consumer spending, there should also be a focus on financial saving and planning. A survey released earlier this year found that while Hispanics are growing more optimistic about their financial future, many are still struggling to get by. In fact, 59 percent of Hispanics described their financial condition as “only fair” or “poor.” By creating and implementing a financial plan, Hispanics will be in a better position to reach their financial goals. Here a few tips to get started:
- Set goals: Setting specific financial goals can help keep your eye on the prize and avoid spending on items unrelated to your goals. Track your spending by creating a spreadsheet or notebook. Other options include online programs or smartphone apps
- Create a budget: Evaluate what you own and what you owe. Then go back to the goals you have defined and set a savings plan for each one.
- If possible, pay down debt: Based on your budget and financial goals, determine how much additional money you can realistically put toward your debt each month. Don’t have extra income? Look for ways to cut back on monthly spending.
- Maxing out retirement: If you have a retirement plan at work, always sign up for your employer contribution to save as much as possible for retirement. Some employers match at least a part, if not all, of their employees’ retirement account contributions.
- Create an emergency fund: By building an emergency fund, you create a safety net that can be used to meet your most essential needs instead of relying on high-interest credit cards or loans when an unexpected expense arises. Make sure you have at least three to six months’ worth of living expenses for nondiscretionary expenses in case your income ceases or declines.
- Review critical documents: Because life’s circumstances continually change, you should review your legal documents and beneficiary designations every year. This will entail carefully combing through any wills, trusts, retirement plan documents and life insurance policies to make sure they’re up-to-date. Seek the assistance of a qualified adviser if any modifications are necessary.
There are now more than 56.6 million Hispanics living in the United States. By 2060, the Hispanic population is projected to swell to 119 million, an estimated 28.6 percent of the nation’s population. While the impact of their spending power to our economy will be undeniable, it’s important that Hispanics also ensure they are in a financially secure position.
Lisa Taranto Schiffer
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