New Research Indicates Non-Prime Hispanics Have a Leg up on Financial Health

U.S. Hispanics have more acumen for financial planning and saving versus the general population, CNMC study finds

When it comes to personal finances, Hispanics in the U.S. are more stable and optimistic than other groups studied. A newly released study from Elevate's Center for the New Middle Class (CNMC) found that non-prime Hispanics – or those with credit scores below 700 – experience higher levels of employment and less volatile monthly income. When compared to the broader non-prime community, non-prime Hispanics in the U.S. are:

• 65% more likely to plan for major expenses
• 86% more likely to feel financially stable
• 38% more likely to save money each month
• 20% less likely to have had a vacation expense in the last 12 months
• 23% less likely to spend on routine medical expenses
• 50% more likely to be able to cover a $1200 unexpected expense
• 3x more likely to regularly pay using a smartphone
• 20% less likely to have a credit card
• 25% less likely to have a personal retirement account
• 2x more likely to regularly give money to a child or grandchild
• 40% more likely to be employed

"We found several bright spots in Hispanic experience, including: financial stability, savings, and employment," said Jonathan Walker, Executive Director to the Center for the New Middle Class. "We also found that U.S. Hispanic families are far more financially integrated and often rely on one another for advice. This is a particularly valuable finding in that small investments in financial literacy can pay off many times over."

However, the study identified specific challenges that might suggest future difficulty. Non-prime Hispanics are significantly less likely to spend on routine medical expenses, a disturbing statistic that can impact one's future physical health. While the non-prime population as a whole suffers from inadequate retirement savings, the non-prime Hispanic community lags even further behind, with only 9% of the group having a retirement account.

Non-prime Hispanics in the U.S. bank differently. They are more likely to adopt new financial tools like mobile apps and peer-to-peer payment systems, yet lag behind in more traditional banking features like checking accounts and credit cards. Notwithstanding their willingness to use technology, they are more likely to use cash than the general population.

Employment for the non-prime Hispanic population also stands out. The group experiences considerably higher employment rates than their peers, but also higher rates of job change. Additionally, among prime and non-prime groups, U.S. Hispanics feel the tug of entrepreneurship with high levels in both groups expecting to start a business in the next two years.

Another interesting fact the study uncovered: Household Spanish dominance and acculturation rates do not vary from prime to non-prime.

U.S. Hispanic families are far more financially integrated than the general population. "A stronger sense of community exists for U.S. Hispanics; thus, they are more likely to help family and friends with their finances than other demographics," said Jonathan Walker. "Along those same lines, they are also significantly more likely to seek financial help from their parents and to support their children financially."

The landmark financial study was conducted online and in person, in English and Spanish, with acculturated, unacculturated, and bicultural Hispanics. The findings reflect the prime, non-prime, and unbanked experience.

About the Research

This study represents results from a survey of 1311 U.S. consumers (878 Hispanic and 433 drawn from the general population). Of the 1311, 473 identified as non-prime, 170 as credit "invisibles" (meaning they did not have enough credit history to have a credit score), and 668 as prime.

Interviews were conducted July 5-18, 2018. To view the entire report, click here.

About Elevate's Center for the New Middle Class

Elevate's Center for the New Middle Class conducts research, engages in dialogue, and builds cooperation to generate understanding of the behaviors, attitudes, and challenges of America's growing "New Middle Class." For more information, visit: http://www.newmiddleclass.org

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