September 10, 2009
By Adriana G. Martinez*
NEW YORK - As a single mom of a six-year-old boy who just started school, New York-based waitress Yania Mena is starting to worry about saving for her son’s future. At 29, this immigrant from the Dominican Republic knows thet task is a difficult one.
Making $22,000 a year in one of world’s most expensive cities, she does not qualify for foodstamps, and her salary barely covers her basic bills.

She shares a one-bedroom apartment with her sister in Washington Heights, in the north area of Manhattan, and her only luxury is a $15 hairbrush at the local hair salon every other week..
Mena is not being able to save because, like more of one third of Latinos in the United States, she uses her credit card to make ends meet. And, although she wants to save, she finds it increasingly difficult to change this situation in this economy.
“Everytime I manage to get out of credit card debt I fall on it again, and it’s always money to buy necessary things for Ariel, like clothes, because every year he needs new ones, or school supplies,” she said.
Mena has $4,000 in credit card debt. She is concerned about her debt, but she seems even more worried about her boy’s future.
“I know I need to start saving money until my son is 18. I don’t want him to be like me, I want him to have a career,” said Mena, who also dreams of getting a scholarship herself to apply for a degree in graphic design.
Hispanics are the fastest growing minority in the United States, a group of more than 46 million, or 15 per cent of the population. But their are poorer in comparison with other families and struggle to build wealth, a study said.
According to the 2007 Survey of Consumer Finances (SFC), a triennial interview survey of US families sponsored by the Board of Governors of Federal Reserve System with cooperation with the Department of the Treasury, the median worth of nonwhites or Hispanics was $31,000, at least five times less than other American families, and their means were $237,900, far less than the average $701,800 for other families.
“Latinos are able to save, but many can’t do it because they have big families,” said Juan B. Gonzalez, a housing counselor at Cypress Hill Local Development Corporation in Brooklyn, who offers financial and housing advice to low-income families in Brooklyn.
“And everybody is under the pressure of consumerism, so people get overwhelmed by debt,” he added.
IMMIGRANTS
The lack of information on how to manage personal finances is also a hurdle for Hispanics, specially with so many of them being immigrants.
According to the Pew Hispanic Center, a Washington-based think tank, 39.8 percent of them are foreign born.
“People who come from other countries don’t know how finances in the United States work, it’s all too different from their culture,” said Graciela Aponte, wealth-building legislative analyst at the National Council of La Raza, U.S. main Latino civil rights and advocacy group.
Aponte said the council backs around 50 community centers that focus on helping people get rid of debt, improve credit scores, start saving and eventuallly buy a house, but she recognizes the task is harder than ever for Latinos as the United States faces it's worse recession in decades.
“Saving for their children is not at their budget at all, and in this economy it’ll be increasingly difficult to get scholarships,” she said. “It will be also very hard for students to pay for their own education,”, she added.
Financial help is exactly what Mena is looking for to go back to school, and, in the future, her son will probably request it too. If she manages to pay her debt and increase her income, either by getting a new career, a second job, or working extra hours, she'll be able to build a cushion for emergencies. She might even consider buying a New York state tax-deferred education savings account, known as 529 plans, to finance her son's education.
But she should take that road only if she, as many other Latinos, realizes her son would not qualify for financial aid, points Van Grevenhof, a senior tax analyst for Thomson Reuters.
“For a student who is unlikely to qualify for financial aid, Education Savings Accounts (ESAs), 529 plans, and assets positioned in the name of the child should be incorporated as part of an effective college funding strategy,” he said in a recent report on the subject.
In New York, the direct, government-backed program for this type of plan is the 529 College Savings Program (www.nysaves.org). It offers various investment choices and tax-free withdrawals, but only when the funds are used for "qualified higher-education expenses".
The initial investment amounts start at $ 25.00 a month, with a manage fee of 0.49 percent.
Possible drawbacks are the risk of a poor performance in comparison with other funds and the strict rule that the money can only be spent in education-related expenses to be free of taxes.
That's why sometimes it's better to aim for an overall savings strategy that would include savings accounts, certificates of deposit, Treasury bills and other safe investments, with part of the money invested in stock-index funds, said Chris Farrell, an economics editor for American Public Media's "Market Place Money" in a recent column about college funds.
"This mix of secure and riskier savings can be tapped penalty-free to pay for everything form career changes to medical emergencies to, yes, college tuition bills," he said.
*This story was reported with support of the International Center for Journalists (ICFJ)











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