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Hispanics and Money Management - US - May 2016

"The majority of Hispanic consumers tend to be optimistic about how they are doing financially, as their households are able to save money each month. However, Hispanics tend to lack clear financial goals and their distrust of institutions means they are not using them to their full potential."

-  Juan Ruiz, Director of Hispanic Insights

This report looks at the following areas:

  • Hispanics households save money, but don’t make it grow
  • Less-affluent Hispanics hesitant to adopt payment cards
  • What is purchased influences the payment methods Hispanics use

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Four segments of Hispanics differ in the way they manage their money
          • Figure 1: Hispanics and money management segments, March 2016
        • The issues
          • Hispanics households save money, but don’t make it grow
            • Figure 2: Financial health of Hispanic consumers, March 2016
          • Less-affluent Hispanics hesitant to adopt payment cards
            • Figure 3: Hispanics’ debit and credit card ownership, by household income, October 2014-December 2015
          • What is purchased influences what payments are used
            • Figure 4: Payment method Hispanics use, by type of purchase, March 2016
          • The opportunities
            • Teaching younger Hispanics the advantages (and dangers of credit)
              • Figure 5: Hispanics’ payment card ownership, by gender and age, October 2014-December 2015
            • Making objectives tangible
              • Figure 6: Hispanics’ biggest financial challenges, March 2016
            • Helping Hispanics take control
              • Figure 7: Hispanics’ attitudes toward financial planning - confidence, by household income, March 2016
            • What it means
            • The Market – What You Need to Know

              • Hispanics and Money Management segmentation
                • Optimism affects how Hispanics manage their money
                  • However, that optimism comes with some caveats
                  • Hispanics and Money Management Segmentation

                      • Hispanics and Money Management segmentation
                        • Figure 8: Hispanics and money management segments, March 2016
                      • Traditional Money Managers (25%)
                        • Characteristics
                          • Opportunities
                            • Figure 9: Profile of Hispanic Traditional Money Managers, March 2016
                          • Cautious Credit Advocates (26%)
                            • Characteristics
                              • Opportunities
                                • Figure 10: Profile of Hispanic Cautious Credit Advocates, March 2016
                              • Misunderstood Money Managers (24%)
                                • Characteristics
                                  • Opportunities
                                    • Figure 11: Profile of Hispanic Misunderstood Money Managers, March 2016
                                  • Credit Averse (25%)
                                    • Characteristics
                                      • Opportunities
                                        • Figure 12: Profile of Hispanic Credit Averse, March 2016
                                      • Cluster methodology
                                      • Market Perspective

                                        • Hispanics more positive about finances now compared to one year ago
                                          • Figure 13: Perception of financial situation vs 12 months ago, by Hispanic origin and household income, October 2014-December 2015
                                        • Hispanics more optimistic about their financial future
                                          • Figure 14: Perception of future financial situation, by Hispanic origin and household income, October 2014-December 2015
                                        • Working Hispanic moms’ financial contribution is key
                                          • Figure 15: Hispanic moms’ employment status, by household income, June 2015
                                      • Market Factors

                                        • Improving labor market for Hispanics can give Hispanics confidence to spend
                                          • Figure 16: Hispanic unemployment (seasonally adjusted), January 2007-March 2016
                                        • However, median household income for Hispanics lags…
                                          • Figure 17: Median household income, by race and Hispanic origin of householder, 2014
                                        • …and real household income has remained flat for the past 10 years
                                          • Figure 18: Median household income for households headed by Hispanics, in inflation-adjusted dollars, 2004-14
                                        • Hispanics’ income gap develops after the age of 25
                                          • Figure 19: Median household income, Hispanic vs all, by age of householder, 2014
                                        • Hispanic market becoming bicultural
                                        • Key Players – What You Need to Know

                                          • Sizes matters as it communicates security
                                            • Relationships with Hispanics need to be nurtured
                                              • Beware of the fees
                                                • Hispanics’ money management skills to gain sophistication
                                                • What’s Working?

                                                  • It’s all about trust (and name)
                                                    • Branch location
                                                      • Rates and fees
                                                        • Bilingual services
                                                          • Word-of-mouth
                                                            • Figure 20: Main banks Hispanics used in the last 12 months, indexed to all US consumers, October 2014-December 2015
                                                            • Figure 21: Main drivers for Hispanics when choosing a bank, indexed to all US consumers, October 2014-December 2015
                                                        • What’s Struggling?

                                                          • A passive approach
                                                            • Nobody likes to pay fees
                                                            • What’s Next?

                                                              • Increasing interest in managing their money
                                                                • Continuous shift toward payment cards
                                                                  • Timid take-off of mobile payments
                                                                  • The Consumer – What You Need to Know

                                                                    • Hispanics are covering their expenses and saving some
                                                                      • Hispanics lag behind non-Hispanics on payment card ownership
                                                                        • Affluent Hispanics love their credit cards
                                                                          • Hispanics tend to prioritize more immediate goals
                                                                            • Hispanics’ positive attitude a double-edged sword
                                                                            • Financial Health

                                                                                • Hispanics see themselves financially healthy
                                                                                  • Hispanic men report higher savings potential
                                                                                    • Figure 22: Financial health of Hispanic consumers, by age and gender, March 2016
                                                                                  • Education pays off
                                                                                    • Figure 23: Financial health of Hispanic consumers, by level of education, March 2016
                                                                                  • Savings may not be yielding significant returns
                                                                                    • Figure 24: Mutual fund/brokerage accounts ownership, by Hispanic origin, gender and age, October 2014-December 2015
                                                                                • Payment Card Ownership

                                                                                  • One in four Hispanics don’t have any type of payment card
                                                                                    • Figure 25: Hispanics’ payment card ownership, indexed to all US consumers, October 2014-December 2015
                                                                                    • Figure 26: Hispanics’ payment card ownership, trended, Fall 2010-15
                                                                                  • Younger Hispanics taking their time to acquire credit cards
                                                                                    • Figure 27: Hispanics’ payment card ownership, by gender and age, October 2014-December 2015
                                                                                  • Payment cards’ popularity increases with household income
                                                                                    • Figure 28: Hispanics’ payment card ownership, by household income, October 2014-December 2015
                                                                                • Payment Methods by Type of Purchases

                                                                                    • There’s a shift in payment methods as item sizes increase
                                                                                      • Figure 29: Payment method Hispanics use, by type of purchase, March 2016
                                                                                    • More affluent Hispanics gravitate toward credit cards even for small purchases
                                                                                      • Figure 30: Payment method Hispanics use for small vs large ticket items, by household income, March 2016
                                                                                      • Figure 31: Credit card rewards or affiliations Hispanics have in their credit cards, by household income, October 2014-December 2015
                                                                                  • Financial Challenges

                                                                                      • Saving for less tangible goals biggest challenge for Hispanics
                                                                                        • Disposable income influences priorities
                                                                                          • Figure 32: Hispanics’ biggest financial challenges, March 2016
                                                                                          • Figure 33: Hispanics’ biggest financial challenges, by household income, March 2016
                                                                                        • Some challenges change based on age
                                                                                          • Figure 34: Hispanics’ age-related financial challenges, by gender and age, March 2016
                                                                                          • Figure 35: Attitudes toward retirement, by Hispanic origin and age, October 2014-December 2015
                                                                                        • Hispanic women want to feel secure
                                                                                          • Figure 36: Hispanics’ gender-related financial challenges, by gender and age, March 2016
                                                                                          • Figure 37: Perception of financial security, by Hispanic origin, gender and age, October 2014-December 2015
                                                                                      • Financial Acumen

                                                                                          • Hispanics aim for prudence
                                                                                            • Figure 38: Hispanics’ attitudes toward financial planning, March 2016
                                                                                          • Older Hispanics more likely to live within their means
                                                                                            • Figure 39: Hispanics’ attitudes toward financial planning - prudence, by gender and age, March 2016
                                                                                          • Affluence and confidence go hand-in-hand
                                                                                            • Figure 40: Hispanics’ attitudes toward financial planning - confidence, by household income, March 2016
                                                                                          • Concern about the future increases with acculturation
                                                                                            • Figure 41: Hispanics’ attitudes toward financial planning - concern, by level of acculturation, March 2016
                                                                                        • Appendix – Data Sources and Abbreviations

                                                                                          • Data sources
                                                                                            • Consumer survey data
                                                                                              • Terms
                                                                                                • A note on acculturation
                                                                                                • Appendix – Consumer

                                                                                                  • Payment card ownership
                                                                                                    • Figure 42: Hispanics’ payment card ownership, by age, October 2014-December 2015
                                                                                                    • Figure 43: Hispanics’ payment card ownership, by language spoken at home, October 2014-December 2015

                                                                                                Companies Covered

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                                                                                                Hispanics and Money Management - US - May 2016

                                                                                                £3,199.84 (Excl.Tax)