Study: Latino finances ‘fragile’

A majority of Latinos say they have trouble covering monthly expenses, and almost 40 percent say they would have trouble finding $2,000 in an emergency, a new study said.

Despite attaining higher education levels in recent decades, many Latinos find themselves in a “fragile financial state,” according to the study by New York investment giant TIAA-CREF.

The report draws on data from the vast 2012 National Financial Capability Study, a national survey of 25,000 American adults, and examines in detail the personal finances of 1,553 respondents who de- scribed themselves as Hispanic and reported at least some college education.

“(W)hile growing in economic importance, Hispanics are set apart from the general U.S. population by gaps in wealth and income, as well as less integration with traditional financial institutions, differences that were only exacerbated by the 2008-2009 recession,” the report said. “Such disparities affect even college-educated Hispanics, a growing sub-group.”

The study, done in collaboration with Global Financial Literacy Center at George Washington University, adds to a growing body of research on the troubled state of Latino finances, including among the college-educated, in the wake of the financial crisis of 2008. Among all U.S. ethnic groups, Latinos were the hardest-hit by the crisis and subsequent recession, researchers have found.

Earlier research cited by the TIAA-CREF study shows that from 2005 to 2009, Latino household wealth fell 66 percent, compared with 53 percent for African-American and 16 percent for white households.

Unemployment among Latinos doubled from 2007 to 2011, and the poverty rate rose 6 percentage points from 2006 to 2010, both increasing faster than any other ethnic group, the study said.

The TIAA-CREF survey found that 59 percent of respondents said they have trouble covering monthly expenses.

It also found that more than half of respondents said they were unable to save at all, and 20 percent said they spent more than their income over the past year. One third of respondents said they spent as much as their income.

Homeownership among Latino households trails the broader population, with only 53 percent reporting owning a home compared to 71 percent for whites.

Half of the respondents reported engaging in expensive credit-card practices that can run up interest charges and fees, including paying the minimum monthly balance only or using a card for a cash advance.