Latinos in the U.S. are making significant financial strides, yet many long-standing money myths continue to hold people back from building wealth. With Latino purchasing power surpassing $2.8 trillion in 2023—greater than the GDP of countries like Brazil and Canada—our economic impact is undeniable. That’s a trip!
However, studies show that only 26% of Latinos have retirement savings, and nearly 40% remain unbanked or underbanked, meaning they don’t fully utilize banking and investment tools that could grow their wealth. (Source: Pew Research Center, FDIC Banking Survey).
Perhaps, many of these financial habits come from deep-rooted beliefs passed down through generations. In addition, how can the attention be on saving for retirement when the focus is much more immediate?
While Latino culture values hard work, family support, and community, some outdated money myths can actually prevent financial success. Whether it’s avoiding credit cards, thinking you need to be rich to invest, or believing cash is safer than banks, these myths can cost Latinos thousands—even millions—over a lifetime. It’s time to separate fact from fiction and take control of our financial future. Let’s bust some of the biggest money myths in the Latino community and learn what to do instead.
Myth #1: “Cash Is King – Avoid Banks!”
Nearly 30 years ago, I had a cousin who was a mechanic and saved diligently. He got robbed during a home invasion and lost a significant amount of cash at gunpoint. It was a traumatic event for him and his mother – as well as the rest of our family. I’ll never forget that.
Unfortunately, despite what happened, my cousin still avoids banks. He always felt his money was safer with him. Unfortunately, it deprived him of banking benefits for most of his adult life.
Why People Believe It: Many Latinos, especially immigrants, distrust banks due to bad experiences, hidden fees, or financial instability in their home countries. A collection of bad experiences, along with stories from others, can really discourage one from banking.
But… Keeping cash at home can be risky (theft, loss, no interest growth). Banks today offer free or low-fee accounts, better security, and higher savings potential. The truth is that banks in the U.S. are safe. Accounts are insured up to $250,000 by the federal government.
What to Do Instead:
- Avoid most fees by opening a no-fee checking account with a trusted bank or credit union.
- Use a high-yield savings account to grow your money safely. Consider using a third and separate bank account when you travel internationally or pay for things online (I’ll get into this topic in another post)
Myth #2: “Only Rich People Invest”
Why invest? We each have our reasons, but I invest because I want my money to work for me so that I can draw on it in the future.
We can all be investors and savers.
Still, many believe that only rich people invest in stocks, bonds, or other investments.
Why People Believe It: Many assume you need thousands of dollars to invest or that investing is too complicated.
Why It’s Wrong: Investing is now easier and more accessible than ever. If you have the ability to set up an Instagram account, you can set up an investment account.
You can start with as little as $1. In fact, when I started, I had opened up with just a few dollars at Charles Schwab.
What to Do Instead:
- Consider setting up with a no-fee and trusted brokerage, like Charles Schwab.
- Learn how investing can build wealth (link to your Investing 101: How to Grow Your Money Without Fear article).
Myth #3: “If You Don’t Have Debt, You Have Good Credit”
Talking about developing credit can be challenging because many people think that not having any debt means having excellent credit. Unfortunately, I learned this the hard way in my early twenties. Because of this, I’ve had to pay thousands of more dollars in interest fees.
Why People Believe It: Many assume that avoiding credit cards and loans will improve your FICO score.
Why It’s Wrong: Credit scores are based on credit history. That means you have to carefully develop a strong credit history. If you never borrow or use credit, lenders have no way to measure your trustworthiness.
What to Do Instead:
- If you don’t have a credit card yet, consider opening a secured credit card or small credit-builder loan. Or…
- Open a bank account with a local credit union. After about a year of positive activity, you’ll likely get asked to open a credit card. If not, consider applying for a lower-limit credit card with low fees!
- Pay bills on time and keep credit usage low.
Myth #4: “You Should Always Help Family Financially, No Matter What”
This is a tough one for many of us Latinos. I know if any of my family members need financial assistance, I would seriously consider it. But you need to be smart about your help. Sometimes, helping people close to you too much can jeopardize your own financial health. In the long run, this could be devasting to your family. Sometimes, learning to say “No” (in a kind and empathetic way) can be a good approach.
Why People Believe It:
I get it. Many Latino families place a strong emphasis on family first—helping relatives financially is often seen as a duty, whether it’s sending remittances, covering medical bills, or lending money to struggling family members.
Many people feel guilty if they don’t help, even when it threatens their own financial stability.
Why It’s Wrong:
- Supporting family is important, but not at the expense of your own financial health. Constantly giving money without boundaries can leave you struggling and unable to build your own future.
What to Do Instead:
Think ahead. Set a budget or savings to help—decide how much you can afford to help without hurting your own finances.
Find non-monetary ways to help, like offering time, skills, or resources.
If you send remittances, look for low-fee transfer services.
Myth #5: “Latinos Don’t Need to Worry About Retirement—Our Kids Will Take Care of Us”
Why People Believe It:
- Many Latino families have multigenerational households, where parents expect their children to care for them as they age.
- Retirement savings isn’t always a big conversation in Latino households, especially for first-generation immigrants who focus on working hard now, not planning for later.
Why It’s Wrong:
- While family support is wonderful, depending solely on your kids for financial security can put pressure on them and limit their own success.
- Social Security may not be enough—many retirees struggle with medical bills, housing, and everyday expenses.
What to Do Instead:
Open a bank account with a local credit union.
Start saving for retirement early—even small amounts in a 401(k) or IRA grow over time.
Look into low-cost retirement options, like Roth IRAs and target-date funds that require minimal management.
Challenge the Myths, Take Control of Your Finances
Latino families have incredible financial potential, but outdated money myths can hold us back from true financial security and wealth-building. Building wealth isn’t about luck or being rich from the start; it’s about making informed choices and using the right financial tools.
The more we learn, share, and apply better money habits, the stronger our financial future will be. Challenge the myths, take control of your finances, and start paving the way toward generational wealth.
