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Why Hispanics are spending more than usual

The pandemic convinced Hispanic-Americans to take their safety seriously – along with financial preparedness.

According to a recent survey conducted by Debt.com en Español, US Latinos and Hispanics are spending more preparing for natural disasters in 2021 than they did in 2020. The reason for the change in financial habits: COVID-19.

The pandemic took everyone by surprise, revealing just how scary life can be when you are not prepared. Now, data finds that Hispanics are spending more than usual to prepare for the unexpected. 

Photo by Anna Shvets from Pexels

Financial preparedness post-COVID

As hurricane season continues and wildfires spread throughout the western US, climate change and natural disasters are on everyone’s minds. Like a global pandemic, natural disasters can be devastating and unpredictable.

Even with warnings, one can never know how bad a disaster might be. This is why preparing and planning ahead is crucial. Both businesses and families should have a plan in place for dealing with natural disasters and the aftermath. 

US Hispanics and Latinos seem to have learned this lesson post-COVID. When Debt.com en Español polled more than 1,000 Hispanic and Latino Americans, 3 in 4 said they were either “spending a little more than usual” or “spending at least double” getting ready for hurricanes, tornadoes, flooding, blizzards, and earthquakes. Only 1 in 4 said they were spending less than before and all said COVID-19 was directly responsible for their extra spending.

financial preparedness

Natural Disaster Survey 2021. (Image source)

“Even during the pandemic, we saw how Americans were changing their spending and saving habits, often for the better,” says Debt.com chairman Howard Dvorkin, CPA. “Now we’re seeing how long that will last. At least in this one area, for this one year, it’s obvious: COVID-19 took such a terrible and sudden toll, no one wants to be caught unprepared again – for anything.”

Additionally, Debt.com en Espanol’s Natural Disaster Survey revealed that most Hispanic-Americans will also be paying more attention to government warnings. The survey showed that 85% said they will take government warnings more seriously and will prepare much better than they have in the past. 

You might be interested: Damaris Diaz shares pandemic stories and how COVID has impacted the Latino community

Decrease in credit card spending

Survey data from Debt.com also revealed another interesting change in the past year: a decrease in credit card spending post-COVID. The pandemic has made people more aware of their spending and more concerned over accumulating debt.

Now, data shows Americans are charging less to their credit cards, and many believe the decrease in credit card spending will continue post-COVID, especially when it comes to approaching natural disasters. 

financial preparedness

Debt.com post-Covid credit card spending survey results. (Image source)

Financial counselor Howard Dvorkin was particularly intrigued by two survey results. First, for those who have been through a natural disaster before, less than 26% needed to use their credit card to pay for their recovery efforts. Yet those who did need their credit card for recovery efforts spent a significant amount: More than 4 in 10 charged over $500 to a credit card. 

“On the one hand, I’m encouraged that many people could get their lives back to normal without charging extra on their credit cards – because it’s a very expensive form of debt,” Dvorkin said. “On the other hand, I worry about those who charged $500 or more. I suspect some of them are still paying that off, since their interest rate could easily top 20 percent.”

As we move forward, post-pandemic it is important to remember the lessons learned. Financial preparedness will ensure families and businesses have the resources needed to recover whenever a disaster may strike. 

ABOUT: Debt.com is the consumer website where people can find help with credit card debt, student loan debt, tax debt, credit repair, bankruptcy, and more. Debt.com works with vetted and certified providers that give the best advice and solutions for consumers ‘when life happens.’

money managing, budget

Hate budgeting? Key money managing habits to thrive in business and life 

Budgeting, budgeting, budgeting! We’ve all heard about the importance of budgeting before, but many still overlook this crucial money managing practice when it comes to their personal and business finances. 

money managing, budget

Key money managing habits to make your personal and business finances thrive. (Photo by Karolina Grabowska from Pexels)

Budgeting can look different depending on the area of focus. Your personal household budget vs your business budget will prioritize different things. However, at the core, there are also many similarities and the mechanics are the same. 

When you create a budget, you are planning your incoming and outgoing expenses. This core practice is the same for both personal and business budgets. 

Businesses and households that thrive know how to manage their money and keep their expenses in check. By implementing these money managing strategies into your life, you too can thrive and prosper in both business and life. 

Creating a personal spending plan

Often, budgeting begins in response to a financial crisis, however, ideally, budgeting is proactive, not reactive. Instead of being about damage control, it can be about monthly progress and strategic financial planning. 

By creating a personal budget, you and your household can better plan your spending and save for future emergencies or unexpected expenses. 

Budgeting also includes planning for major purchases. By creating a plan for purchasing big-ticket items, there is less potential for financial surprise and unexpected costs down the line. 

Entrepreneur, international speaker, best-selling author, licensed CPA, and a Chartered Global Management Accountant, Sharon Lechter shares key budgeting tips on her blog. Below are her tips to establish a solid personal budget, or as she prefers to call it– a personal spending plan. 

A personal budget should include the following steps

    • Establish your objectives (financial, lifestyle, etc.)
    • List all of your income sources (wages, investments, spousal support etc.)
    • Identify and list all expense categories (housing, auto, groceries, etc), broken into fixed vs. variable
    • Assign amounts to each spending category
    • Allocate savings
    • Account for fluctuations or one-time events
    • Track your progress and make adjustments if necessary

Managing your business budget

Business budgeting follows the same basic principles as personal budgeting, with a few additions. An accurate business budget will help you ensure your business has enough revenue to stay in business and continue to grow, while also giving you an in-depth window into how the business is performing and what to anticipate in the future.

money managing, budgeting, personal and business finances

Photo by Tima Miroshnichenko from Pexels.

Again, Sharon shares her expertise, laying out the core components to include in a basic business budget

Your business budget should include the following:

    • Your sales and revenue
    • Fixed costs (such as rent) and variable costs (raw materials that vary in price)
    • Debt service
    • Account for fluctuations or one-time events
    • Track your progress and make adjustments if necessary

One major difference between business and personal budgets is that in a business budget, forecasting is more crucial. For most people, predicting one’s monthly income is usually simple as income is fairly consistent from month to month. However, in a business, one must pay closer attention to their revenue forecast to plan for the months ahead. 

In a previous post on Latinas in Business, financial service and leadership expert Jesse Torres advised that business owners should sit down to thoughtfully estimate expected cash inflows and outflows. 

“Factors that to consider include the sales cycle, terms and discounts provided to customers, industry delinquency rates, and other factors that may affect the timing of incoming cash.

Similarly, it is necessary to estimate expenses and other cash outlays. This includes the timing of the purchase of equipment, raw materials, and supplies. It also includes the schedule for payment of salaries, taxes, and other day-to-day expenses.”

Business owners can utilize financial resources from SCORE, a national nonprofit support group for small business owners. SCORE provides a free budget template that business owners can use to manage their cash flow.

You might be interested: Financial matters are women reluctant to talk about money?

Budgeting for Unexpected Costs

One area where budgeting really pays off is when you are faced with sudden, unexpected costs. Most of the time, even without budgeting, we tend to know what costs to expect month to month in both our personal and business finances. You know you need to cover your rent, gas, utilities for instance and probably have that money set aside. However, will you be prepared for an unexpected expense such as a car repair? 

The SCORE blog offers budgeting resources to anticipate these unexpected costs and allows you to set aside funds to tackle these challenges when they arise. Marketing Content Manager, Lauryn Johnson breaks down the differences for anticipating unexpected costs for both personal and business budgets: 

At home: Those who are prepared will have sudden expenses covered by a portion of their budget, usually money set aside specifically for “incidentals.” Others may cover these expenses with their “rainy-day” fund. Either way, those who budget and save will be more likely to successfully navigate an unexpected expense without going into debt. The less prepared may end up having to charge the unexpected expense on credit cards, loans, or other high risk methods. 

In business: For most business situations, costs should be considered either fixed or variable. Much like your regularly budgeted personal expenses, fixed costs have to be paid regardless of your profitability each month. Variable costs, however, are where you should have a little more flexibility.

Implementing these budgeting money managing practices in both personal and business finances will help you thrive and prosper in all avenues of life.