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Hispanics and Money Management - US - May 2016

Published By :

Mintel

Published Date : May 2016

Category :

Banking

No. of Pages : N/A

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.

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

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