The Wealth Gap: A Reflection of Systemic Barriers

I am a data lover, no surprise here as a math major and financial advisor. However, some numbers I see that need more attention are those related to the Latino wealth gap. I don't usually write articles but this topic felt like it was going to be longer and need more explanation to break down some of the nuances.

It’s no surprise that Latino households have a lower net worth than the typical American household. The data paints a stark picture of economic inequality that many of us see in our communities and feel during financial downturns. But this gap isn’t just about numbers—it’s a reflection of systemic barriers, limited access to financial education, and the lack of capital flowing into our businesses.

Latino families, on average, have nearly six times less wealth than white families. And only one-third of Latino households have emergency savings, leaving many vulnerable to financial shocks like medical emergencies or unexpected expenses. On top of that, Latinas earn just 57 cents for every dollar a white man earns. Over a lifetime, this adds up to hundreds of thousands of dollars in missed income, making it even harder to build wealth.

Homeownership has been one of the main ways Latinos build wealth, but with housing prices soaring, this path is becoming less accessible. And while more Latinos are becoming homeowners, participation in other wealth-building opportunities like the stock market remains low. Only 26% of Latino households own stocks, compared to 60% of white households. This lack of diversification in wealth-building strategies makes it harder for our community to close the gap.

Breaking the Cycle: What Needs to Change

In my opinion, there is plenty that needs to change but here are a few places we can start.

1. Normalize Financial Conversations: Money is still a taboo topic in many Latino households, often seen as a source of tension or secrecy. But if we don’t talk about money, we can’t learn how to manage it or confront the challenges we face. Normalizing these conversations, starting with budgeting and saving, is a critical first step.

2. Leverage Existing Tools: Many Latinos are leaving money on the table by not participating in workplace retirement plans like 401(k)s or employer matches. Most of us (because I know I had no clue when I landed my first full-time job) don't even know how these systems work of what the financial jargon all means, let alone how to invest our money. At the same time, we often keep our savings in cash rather than high-yield accounts or investments that grow over time. These small changes can have a big impact.

3. Protect Against Predatory Products: Low-income communities are often targeted with financial products like whole life insurance or annuities, which are oversold as “investment” solutions. While these products can work in certain situations, they’re often not the best option for most people. Financial education and unbiased advice are key to avoiding these traps.

4. Support Latino-Owned Businesses and the Latino Economy: Latino entrepreneurs are a vital part of the U.S. economy Supporting these businesses—through patronage, mentorship, or advocacy—strengthens not only our community but also the broader economy. The latino economy is a powerhouse; in 2024 the U.S. Latino GDP was $3.6 trillion, making it the fifth-largest GDP in the world.

Closing the wealth gap requires systemic change. Policies that address wage inequities, affordable housing, and access to capital for minority-owned businesses are essential.

The wealth gap isn’t just a Latino issue—it’s an American issue. Latinos make up nearly 20% of the U.S. population, and our success is tied to the success of the nation as a whole. Closing this gap requires a collective effort: educating ourselves, advocating for systemic changes, and lifting each other up.