Latino Americans are feeling the pinch of inflation.
No doubt, inflation has eaten into American household earnings, but its impact is particularly severe on Latino households.
A look at some recent data tells a dark financial story for Latino families. While the national median household income for the average American family increased by 4% in 2023, Latino families experienced a modest rise of only 0.4%. Those are crazy numbers. That’s a negative ten times the growth from non-Latino homes!
As a result, Latino families are finding it super hard to keep up with the rising cost of living and provide basic necessities.
Living on the edge is hard for many Americans, but Latino families are the closest to it.
With the pandemic and the results of inflation everywhere, it’s clear to many in our community that nearly 30% of Latino adults report serious challenges affording basic things like food.
Even more concerning, 53% of Latino families lack sufficient emergency savings to cover at least one month of expenses, leaving them vulnerable to unexpected financial setbacks.
This lack of emergency savings, struggling to increase income, and other system barriers can make Latino families vulnerable. These stats paint a gloomy picture of the money problems many Latino families face.
So, what can be done?
Today, I will talk about some small steps to help Latino families navigate these financial challenges.
How Latino Families Can Outsmart Inflation
Slaying Our Personal Inflation
Inflation may be driving up prices, but that doesn’t mean Latino families have to struggle without any choices. By making smart financial moves, you can work to stretch your budget, increase your income, and protect your money from losing value.
Start small.
Small steps can add up to a better financial position for you and your family. These steps include cutting costs on everyday essentials and finding new ways to earn and invest. These strategies will help you navigate rising prices and build long-term financial stability, even in tough economic times.
Smart Budgeting
Sometimes, we have to make some uncomfortable decisions. This means cutting out some fat and getting help when we need it.
- Focus on What’s Important: Determine what is and what is not important – choose only necessities and reduce extra expenses. For example, start with low-hanging fruit. Review your subscriptions on your phone or other devices. Can you pack your lunch to work instead, at least twice a week? Other small steps to reduce your daily costs can add up.
- Bank Locally: Local banks and credit unions offer no-fee or low-fee accounts. Bigger banks often charge up to $15 every month to simply keep your money with them. To me, this is unacceptable. Fees and charges can really hurt over time. In addition to lower fees, credit unions often pay more interest on your money, too.
Enhancing Income
- Pursue Additional Employment: Consider part-time jobs or freelance opportunities to supplement your income. We’ll discuss this further in another post so that I won’t delve too deeply into it here.
- Skill Development: Enroll in training programs to qualify for higher-paying positions. If you’re in a job you like but aren’t satisfied with the pay, consider ways to request a pay increase. This task requires some time. You’ll first want to ask your boss how you can position yourself for a wage increase.
Investing Wisely
- Education on Financial Instruments: Learn about banking options, various savings accounts, and their interest earnings. Next, learn about stocks, bonds, and mutual funds.
- Family & Friends Investment Pools: Start small by pooling money with trusted relatives or friends to save, invest, or launch a side business together.
Taking Control of Your Debt
- Stay Away from High-Interest Loans: Sometimes, you are in a bind and need a loan to get by. You might be tempted to get one of those high-interest payday loans. Do everything you can to avoid payday loans and seek low-interest alternatives.
- Consolidate Existing Debts: As a long-term strategy, consider combining debts to secure lower interest rates and simplify monthly payments. There are some key points to consider, so I plan to write a separate article on this topic.
Resources and Programs Available to Latino Families
Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) will remain available in 2025. It continues to support low— to moderate-income individuals and families by reducing their taxes and potentially providing refunds.
For the 2024 tax year (i.e., returns filed in 2025), the eligibility rules and credit amounts have been adjusted to reflect inflation and other policy changes.
Some Updates Starting in 2024 include:
- Income Limits: To qualify, your earned income and adjusted gross income (AGI) must fall below specific amounts, which will vary based on your filing status (single, married) and the number of qualifying children. (You will want to check for updates!) For example, a single filer with three or more qualifying children must have an AGI below $59,899, while the limit for married couples filing jointly is $66,819. (IRS)
- Maximum Credit Amounts: The maximum EITC for taxpayers with three or more qualifying children is $7,830. This amount decreases for taxpayers with fewer qualifying children or those without children. (IRS) Expect the numbers to change in the years to come.
- Investment Income Cap: To be eligible for the EITC, taxpayers must have an investment income of $11,600 or less per year. (IRS)
To claim the credit, you must 1) file a federal tax return, even if you owe no tax or aren’t required to file. 2) Having a valid Social Security number. Additionally, you must have been a U.S. citizen for the entire year.
Things often change. In this political environment, you can expect to see further changes. However, for now, these are the rules. I would recommend checking the IRS guidelines on claiming the credit.
It’s definitely worth looking into this, even if it’s not for you. For example, your cousin or siblings may qualify. This could help them out!
Community Support
- Nonprofit Organizations: National and local organizations often provide services like job placement, financial education, and emergency assistance. Depending on your situation and location, consider the available options.
- Local Charities and Churches: When I was a child, my church provided families with a great deal of support. Things like clothing, school supplies, utility assistance, and even emergency rent were not uncommon.
Educational Opportunities for Latino Adults
Acquiring additional skills may be a medium- to long-term strategy, but it remains important nonetheless.
- Scholarships for Vocational Training: Financial aid for courses in trades like plumbing, electrical work, and healthcare.
- Adult Education Programs: Classes that enhance literacy, language skills, and technical knowledge.
Empowering Latino Families
When I was a kid, my family weathered some pretty tough economic times in the late 1970s, late 1980s, and mid-1990s. We had to make changes, and it wasn’t easy.
Latino families have a long history of resilience and adaptability despite the economic hurdles.
By leveraging available resources, making informed financial decisions, and supporting one another, we can navigate these challenges and build a more secure financial future.
Taking action today is key.
Whether it’s claiming tax credits, taking a financial literacy course, or finding creative ways to boost that income, trust me, every step forward counts.
Finally, and most importantly, don’t go through this alone! There is often help available. Seek out community programs, financial workshops, and local and state government resources to help you stay ahead.
By making proactive choices, Latino families can withstand economic pressures and thrive in the long run.
