SPRINGFIELD, Mass., Sept. 27, 2018 /PRNewswire/ -- Financial security and homeownership are at the heart of the American Dream, but many Latinos feel the idea of the American Dream could be disappearing, according to the latest State of the American Family Study by Massachusetts Mutual Life Insurance Company (MassMutual).
The new study examines American family attitudes towards finances and financial planning, and found that one-third (38 percent) of Latinos believe the American Dream is disappearing. When asked about the definition of the American Dream, not living paycheck to paycheck is more likely to be part of the American Dream for Latinos. Latino households are more likely to have a broader definition of family that includes extended family, and one in four (24 percent) worry about being able to care for their parents as well as their own nuclear family.
"With strong family and cultural values, Latino families are juggling multiple financial priorities, such as a future caregiver role for elderly parents," says David Hufnagel, Latino market director at MassMutual. "We want to empower families with resources to help them achieve their long-term financial goals and prepare them to protect their loved ones from unexpected events."
Juggling Financial Priorities
Latinos face some big challenges, including having the lowest household income of all segments surveyed and being among the least prepared for a financial emergency. With an average household income of $107,801 of those surveyed, it appears that Latinos have relatively lower accumulated wealth. Latinos have diverse financial priorities:
Having an emergency fund (81 percent)
Ensuring stable income for the family in case of an unexpected event (76 percent)
Not becoming a financial burden for family (74 percent)
Developing a comprehensive financial plan (65 percent)
Paying for college education (61 percent)
Interestingly, 75 percent of those who selected homeownership as part of their American Dream are confident that they will one day own a home if they do not already. However, although short-term needs such as building an emergency fund and ensuring stable family income if the unexpected happens are top priorities, they worry about meeting competing long-term goals as well as issues beyond their control.
Paying Down Debt
Paying for higher education and wanting to play an active role in preparing children for future success through financial education are especially important for Latinos. But as student debt levels continue to rise in the U.S., many families are worried about managing both day-to-day expenses and paying down debt. The majority of Latinos carry some type of debt in the form of mortgages, credit cards and student loans:
63% have a mortgage. The average mortgage debt is $181,292.
64% have credit card debt. The average credit card debt is $9,652.
27% have student loan debt. The average student loan debt is $32,650.
Preparing for Financial Emergencies
Latinos are less prepared than other consumer populations surveyed for a financial emergency with 19 percent having less than a month of monthly expenses saved.
28% of Latinos have 1-3 months of expenses saved if there was an emergency.
23% of Latinos have 3-6 months of expenses saved if there was an emergency.
21% of Latinos have more than 6 months of their monthly expenses if there was an emergency.
"We want to help mitigate worry and build confidence in attaining the American Dream," says Hufnagel. Our financial advisors, many whom are bilingual, are committed to providing practical action steps to help families in their local communities meet both short-term financial goals and long-term financial security."
MassMutual offers the following three financial tips to help address top financial concerns of Latinos:
Pay down debt: The key is to find the proper balance between debt, income, savings, and retirement as part of an overall financial strategy. Start to find that balance by viewing the elimination of your debt as a long-term financial goal — one that is planned for, reviewed, and assessed regularly. Consider creating a debt management plan, or use MassMutual's 5-10-15-20 calculator, which can help address your financial goals and concerns: income, savings, retirement and debt.
Establish an emergency fund: An emergency fund is a reserve devoted to unplanned financial disasters such as sudden job loss, a house fire or a trip to the hospital. To play it safe, financial professionals recommend couples sock away between six to 12 months' worth of living expenses in a liquid, interest bearing account – more if your job security is in question or you are self-employed.
Save for college: Start saving as early as you can, even at birth for a child's education. Remember that time is on your side to have your money work for you through interest earned and compounded over the years. With a comprehensive savings strategy, you can help reduce – or possibly eliminate – your child's need for student loans. To help you figure out how much you need to save, visit the MassMutual college savings calculator.
Other helpful financial tips and an overview of research findings from Latino families and other groups can be found at massmutual.com/familystudy
The State of the American Family survey was conducted for MassMutual by Isobar between January 19 and February 7, 2018 via a 20-minute online questionnaire. The survey comprised 3,235 total interviews with Americans, including 562 Americans who identified themselves as Hispanic. The vast majority of these interviews (2,730) were conducted with men and women aged 25-64, with household incomes equal to or greater than $50,000 and with dependents under age 26 for whom they are financially responsible. Respondents had to contribute at least 40% to decisions regarding financial matters in their household to qualify. Results were weighted to the March 2017 Annual Social and Economic Supplement (ASEC) of the Current Population Survey for age, income, gender, income, ethnicity, region, and weighted to the 2016 American Community Survey Public Use Microdata Sample for same sex married/partnered couples, to be representative of American families in this age and income bracket. This study includes trending data for the previous survey wave conducted in 2013. The sampling margin of error for this study is +/- 1. 88 percentage points at the 95% confidence level when looking at the results for the 2,730 interviews at a total level.
MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyowners. MassMutual offers a wide range of financial products and services, including life insurance, disability income insurance, long term care insurance, annuities, retirement plans and other employee benefits. For more information, visit www.massmutual.com.