Time To Drop Kick The Racial Wealth Gap: I'm A Latina, And Here's How I'm Planning To Become A Millionaire
Last year, McKinsey published a report called "The economic state of Latinos in America: The American dream deferred."
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The study stated plainly that while Latinos are 17.3% of the US labor force, "Latinos are collectively underpaid by $288 billion a year." Money, and generational wealth, remains largely out of our hands.
As a first gen Latina myself, this is beyond infuriating. For the biggest changes to take place, we need systemic change.
Hispanic households are 17% less likely to have a workplace retirement plan than White households, and that's a barrier that companies need to work on eliminating. Financial literacy is something that an individual can work on.
But more and more Latinos are able to change their personal finances as our communities talk more about money and earn more money.
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The US Hispanic population grew 23% between 2010-2020, and we are the second largest ethnic group in the US. As more and more of us make financial changes in our lives, our whole community flourishes.
I am on track to becoming the first millionaire in my family. I'm 34 and aim to be a first gen millionaire by 42. Here's my plan for making it happen:
1. I opened a Roth IRA and invest aggressively in the stock market.
I didn't start investing until I was 27 and had paid off $30,000 in student loans and interest. Coming from a low-income background and being low-income in my early 20s, I didn't have the money to invest until I eliminated my student loans.
Once they were gone, I put that same amount of money into investing in my Roth IRA. I now have three years' worth of living expenses in my Roth alone.
2. I keep my major living costs low.
3. I've worked on diversifying my streams of income.
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Earning money more than one way is critical to wealth building. Every wealthy person you know has done it. Personally, I own my own business which has six different revenue streams, have my stock market investments, and have non-stock market investments.
Jannese of Yo Quiero Dinero has 11 streams of income, which has allowed her to quit her full time job.
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Jannese told me that "Having multiple income streams has allowed me to become financially independent in my 30s, reach Coast FI, and retire from my 14-year career as an engineer. I'm able to invest aggressively in the stock market, which has secured my ability to retire.
"That was important to me because my parents are unable to retire. They didn't learn about financial literacy until I started to share my learning with them (they're in their 60s). I'm now using the excess income to employ family members in my business, and invest in brokerage accounts that are earmarked for them. Having multiple income streams is allowing me to create generational wealth and break the cycle of poverty, and that's my biggest source of pride."
4. I'm working to continue to increase my income.
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I spent most of my 20s earning under $30,000 a year. I have budgeting down to a science. What will best serve me now is not to cut back anymore, but instead to focus on earning more. For example, increasing business revenue by $20,000 through my business means that after taxes I have an extra $14,000 a year to save or invest.
There's only so much we can cut from our spending, especially as prices on things like food and housing increase. Earning more is a better use of my time and energy.
5. I focus on building financial community.
No one wins alone, and no one does their best work by themselves. It's not a win to me if I am a millionaire with no one else in my life. I want to prioritize my community as well as my money!
This means talking about money with family and friends, being in a supportive business group, and donating to organizations that share my values. Money isn't just something to keep to ourselves; it's a tool to use to support your personal values.
Soledad of Wealth Para Todos believes in financial community as well, choosing to live in a high cost of living area to stay closer to family.
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Soledad told BuzzFeed that to her, "Money is just a tool to help you live life on your terms according to your values. I value time with my familia, so although my housing expenses would decrease dramatically if I moved out of southern California, who would I invite over for holidays, birthday parties, and poker night if I didn’t have my loved ones nearby? Also, who would I count on to help me with picking my kids up from school or helping them with homework when life happens and I can’t do it myself? Having more money but nobody to enjoy it with would feel like such an unnecessary sacrifice."
6. Finally, I avoid high-interest debt like the plague.
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Since paying off my student loans, I've remained 100% debt free. I pay off my credit cards in full each month, and I don't currently own any property, so I have no mortgage.
Avoiding high interest debt is an important part of my millionaire plan. I want my money working for me in assets, not sent away to someone else in the form of a debt payment.
Yanely Espinal, a financial expert from NYC, recommends using the debt avalanche method to pay off high interest debt.
This is just one Latina's strategy! How are you building wealth for yourself or your community?
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