Young Hispanic Women care about money. They are seeking answers to important budgeting questions and reaching out to the Savvy Ladies Free Financial Helpline to get answers
As a Hispanic woman living in the U.S., you want to build financial security, support your family, buy a home, start a business, or save for retirement. Your financial goals are the foundation of building a secure and prosperous future reflecting your dreams and values.
Managing your finances can feel overwhelming. We get it. When you’re juggling family responsibilities, work-life balance, and navigating two cultures, it can feel challenging to find the time and energy to reach your financial goals.
That’s why at Savvy Ladies, we put together this comprehensive blog answering common questions asked on our helpline by our Hispanic audience. Our answers vary depending on each person’s circumstance– age, income, and family situation (spouse, kids, parents). Whether you’re a young professional, starting a new family, or navigating your finances for the first time, you’re in the right place.
Here, our financial volunteers dive deep into what it looks like to:
- Create a budget that works for you
- Save money for college
- Calculate expenses based on needs and priorities
- Improve your credit score
- Start investing
- Pay off debt
- Break free from the paycheck-to-paycheck cycle
Young Hispanic Women ages 18-24 are asking these important budgeting questions
1. I’m a young professional without knowledge of saving, budgeting, investing, or paying off debt. I would like someone to guide me through the first steps.
As a new professional, you are making more money than ever. How exciting!
Our helpline volunteers suggest having an emergency fund for 3-6 months to cover essential expenses– housing, utilities, food, and transportation.
Then, track your income and expenses for a month. Start simple and use a notebook or an Excel spreadsheet to help you visualize and manage your finances in one place. Here, you can apply a common budgeting method– 50/30/20 [1]. You allocate 50% of your income to needs, 30% to wants, and 20% to savings and debt repayment. If budgeting apps are not your thing, putting physical cash into designated envelopes may do the trick.
Next, decide on a debt payoff method:
- Avalanche Method– Focuses on paying the debt with the highest interest rate first. Its benefit? It minimizes the total interest paid over time faster and more efficiently.
- Snowball Method– Focuses on paying the smallest debt first, regardless of interest rate. It provides momentum and it’s effective for those who need motivation to stick with a plan.
Review your paycheck to identify your net pay [2] and where your money goes. Many of us don’t realize how much goes to taxes– FICA, Medicare, Federal & State.
Pay your future self first. This means, saving 15% of your check into your employer’s retirement fund– think 401(k) or IRAs. Now, if 15% is out of your reach, get the full match to not miss out on the free money your employer offers you. Over time, gradually increase your contributions and enjoy the perks of compound interest [3].
Quick money tip? Automation. Set up direct deposits from your paycheck to your savings account. This ensures consistent savings without requiring manual transfers.
Have you checked out Savvy Ladies’ blog on saving and investing? Here, we explore long-term saving goals and address common investing concerns. Another resource to look into is your bank. Banks like Chase and Charles Schwab [4] offer education on saving and investing for beginners.
2. My fiancé and I are living paycheck to paycheck and we really need help to stop.
Living expenses have increased, affecting everyone with rising costs of basic needs. Recognizing this challenge now is key as money stress is not good for a marriage.
Start with some mindset work. Sit down together and list your values. Talk about them with your fiancé to see how they align or are different.
Write down what money means to you and what your financial priorities are. Is it spending for enjoyment, saving for future security, experiencing life’s pleasures, or contributing to causes you care about? Make sure you are both aligned on these financial goals as well.
These actionable steps will help you break free from the paycheck-to-paycheck cycle:
- Circle every payday. In a calendar, review every payday for you and your partner for a year.
- Review your statements. Take a look at your bank and credit card statements to identify how you spend your money.
- Identify unnecessary expenses. Identify what expenses to cut back on with apps such as Spendee or EveryDollar.
- Assign a paycheck. Decide which expense will be covered by each paycheck before its due date– rent, utilities, groceries, income taxes, medical and other insurances.
- Extra paycheck? Use the third paycheck (bonus check) in a given month or holiday bonus to catch up with irregular expenses.
- Save for the future. With any leftover money, save some for future emergencies.
- More tips. Negotiate bills [5] and start a side hustle [6] to bring in extra income.
Sticking to your budgeting plan will help create good financial habits over time until they become effortless and second nature.
3. I am 15 years old. I want to know how to start saving money for college and whether to open a Roth IRA or wait to open a TFSA Alternative when I turn 18.
Saving early in life significantly boosts your long-term financial security and opens more opportunities.
Start with a high-yield savings account. It offers a higher interest rate than traditional saving accounts, with minimum balance requirements, and no or low fees. It is insured and protected, therefore it’s a great place to save a portion of any money you receive long-term. Find the best rates at your local bank/credit union, Ally Bank, or Capital One 360.
Learn about the basics of Roth IRAs. Reputable firms like Fidelity Investments or Charles Schwab have great resources for beginner investors[7][8]. In a nutshell, a Roth IRA is an individual retirement account that grows tax-free and can only be opened if you have earned income. This is a smart money move if you have funds you can afford to leave in the account until retirement.
Choose an account. When you turn 18, consult with your parents to choose the best account for your needs. The firms mentioned above have financial advisors that can best help you reach your investing goals. When choosing an account to invest or save money, check on the tax consequences [9], as they can significantly impact your overall returns. If you want to open any of these accounts before you turn 18, your parents must open the account.
Tax-Free Savings Account (TFSA). If you’re a Canada resident, TFSA [10] is a savings account that offers the following benefits:
- Can be used for any saving goals, not just retirement.
- Flexible investment options– cash, stocks, bonds, mutual funds, etc.
- Tax-free withdrawals.
- Tax-free investment growth.
Other resources for your knowledge:
- College financing– this will minimize student loan debt.
- A 529 plan– a tax-advantaged savings account for education expenses where contributions grow tax-free.
- Debt Free U [11] by Zac Bissonnette– helps navigate college expenses.
4. What’s the best way to budget and save money? Is your budgeting working for you?
Our financial coaches encourage you to try different budgeting and saving methods until you find the one that works for you. The main idea is to be disciplined with your budget and spend money based on needs, not wants. This is how you’ll be able to save smartly.
So what are the benefits of budgeting?
- It breaks you out of the paycheck-to-paycheck cycle.
- It takes you one step closer to your financial goals– retirement, home purchase, debt reduction.
- It helps you determine what your priorities are.
- It motivates you to make saving your top priority.
Before you get budgeting, you’ll want to do this first:
Download the Savvy Ladies budget worksheet or connect your bank information to budgeting apps like Mint, Monarch, EveryDollar, Simplifi, or YNAB (You Need a Budget). These apps offer benefits such as setting spending limits and alerts you if you’ve gone over or under your spending goals.
List all your income sources and write down all your expenses– rent, utilities, food, etc. Then, classify each expense as either “essential” (need) or “non-essential” (want).
Track both income and expenses for 30 days to better understand your spending habits.
Next, give these methods a try. The key is to use a method and stick to it:
Budget Method 1: 50/30/20 [1]
Divide your monthly income in three categories:
- 50% for needs
- 30% for wants
- 20% for savings and debt repayment.
Pro tip: If saving 20% is too much, start with 2-5%. Then, try to gradually increase your savings goal to 20% in the next 5-10 years.
Budget Method 2: Pay yourself first
Take advantage of your employer’s matching contribution to your retirement plan by picking the highest percentage that works for you:
- 10% of your gross income if you’re just starting or have limited income.
- 15% if you can manage more and want to build savings faster.
- 20% if you have higher income or aggressive savings goals.
Remember, saving small amounts each month makes a big impact over time.
Looking for more money tips on budgeting? Check this out.
5. I need help calculating my expenses: finding out what income I need, what I need to cut off, and what I need to pay first.
Tracking your expenses helps you take control of your finances because you allocate your funds more effectively and set realistic financial goals. So how do you do it?
- Categorize. List all your income sources and write down all your expenses– rent, utilities, food, etc. Classify each expense as either “essential” (need) or “non-essential” (want).
- Identify. Place your essential expenses into a budget worksheet.
- Calculate. Sum up all your essential costs. This total represents the minimum amount needed to earn after taxes to cover your basic needs.
- Reduce and redirect. Cut back on non-essential spending temporarily. Use the saved money to pay off debts or boost your savings account.
- Track. Track all your expenses for at least 30 days.
- Pay off debt. Look into the Avalanche or Snowball Method.
6. I’m struggling with budgeting and money management, as I’m paying for everything by myself. I’m also looking for a new place to live, but my area is costly. How do I manage to accommodate all my expenses?
When looking for ways to save money, identifying what to cut back on without affecting your essential needs and quality of life is key. Here are a few tips for smart spending and saving:
- Seek transportation alternatives. Carpool or use public transportation. Talk with your employer about working remotely 1-2 days per week or if they offer a transportation stipend.
- Find a roommate. Reduce costs by finding a roommate to share housing and utility costs while searching for a new place. Apps like Roomi, Roomster, or local colleges are popular sites.
- Affordable Housing Program. Contact your local community service centers. They offer allowances for people including food and medical benefits.
- Side gigs. Generate alternative income streams with these side gigs [14].
- Car swap. Replace your current vehicle with a cheaper option or one that is cheaper to drive.
- Second job. Supplement your income with a part-time job.
7. What steps should I be aware of to improve my credit score?
Your credit score is a 3-digit number companies refer to when they want to assess your financial responsibility. This score is influenced by:
- How long you’ve been building your credit.
- Whether or not you pay bills on time.
- How often you’ve applied for new accounts.
- Whether or not you have different types of accounts.
- How much you owe compared to how much you’re allowed to borrow.
Understanding your credit is an important aspect of managing your finances. Any significant level of debt– often high credit card balances at high interest rates– are crushing. The interest payments and fees can totally ruin your budget. People often make significant payments each month without making progress to the amount owed.
So, what can you do to improve the health of your credit score?
- Set up auto pay and pay all your bills on time.
- Pay your loans in full. Prioritize paying the loan with the highest to the lowest interest.
- Keep your credit card balances low relative to your credit limits.
- Have a consistent income from a company.
- Find the best debt payoff strategies [15] that work for you and be consistent.
- Check your credit report regularly– once each quarter.
- Check for errors and omissions. Dispute all inaccuracies at the Annual Credit Report Website [16].
Bottom Line
Reaching your financial goals requires disciplined saving, careful planning, and sticking to your plan. Creating and following a realistic budget allows you to manage your income, reduce unnecessary expenses, and work towards your financial goals. Start with small, achievable steps and gradually build better financial habits. As you progress, you’ll likely find that budgeting becomes second nature leading to greater financial freedom and peace of mind.
Are you ready to take control of your finances but are unsure how to get started? Our Savvy Ladies financial helpline volunteers are ready to answer all your questions.
Resources:
[1] https://www.nerdwallet.com/article/finance/nerdwallet-budget-calculator
[3] https://www.nerdwallet.com/calculator/compound-interest-calculator
[5] https://www.billshark.com/
[7] https://www.fidelity.com/viewpoints/personal-finance/how-to-start-investing
[8] https://www.schwab.com/how-to-invest/how-to-start-investing
[9] https://www.nerdwallet.com/article/taxes/investment-taxes-basics-investors
[14] https://www.nerdwallet.com/article/small-business/side-business-ideas
[15] https://www.nerdwallet.com/article/finance/pay-off-debt
