The business world is in the midst of a new age: the age of the Hispanic business woman.
Business and government leaders now understand that women are at the forefront of our nation’s economic recovery. The vital role they play is helping America bring its best days forward as women from across the country are overcoming stereotypes and setting new performance standards.
One such woman is Celina Cazarez. She is a mentee through the Latina Leadership Initiative of Greater Des Moines (Iowa)—and her story is inspiring.
A first-generation Mexican immigrant, wife, and mother of two, Cazarez knows what it’s like to arrive in the U.S. in pursuit of the American dream—only to learn one of the key components to independence requires some out-of-the-ordinary thinking, especially when it comes to finances.
Growing up in an unbanked household didn’t seem significant at the time. It wasn’t until she approached a bank to obtain a $300 loan to begin establishing credit that Cazarez discovered financial solutions come in many forms.
Recognizing the importance of building credit was the first right step Cazarez took. Disheartened from being turned down by a bank for a loan, she remained determined.
Cazarez remembered seeing credit unions during her work commute and asked her relatives about them. Uncertain whether a credit union would be as reliable as a bank, she put her trepidation aside and approached $50 million asset Des Moines Metro Credit Union for a $500 loan. She’s still a member of that credit union and couldn’t be happier.
With her goal of building credit underway, Cazarez continued to think creatively when building financial savvy. She cites an example every parent can relate to no matter what their nationality or economic status: kids asking for money.
And like most teens, one of Cazarez’s children found paper money difficult to keep track of. Her desire for teaching fiscal responsibility at a young age led Cazarez to use Coopera Prepaid Reloadable Visa cards for her two children, a 14-year-old daughter and 13-year-old son.
Used as one would cash, in person or online, the easy-to-open cards make a convenient budgeting tool. No credit history or taxpayer ID number is necessary, nor is a financial institution account required at some participating credit unions.
The cards are insured by Visa against loss or theft and can be used wherever Visa debit cards are accepted. With Cazarez’s stewardship, the experience is educational and impactful.
Her simple “formula” is as follows: Each child receives $40 at the end of the month for doing well in school. (They do well at home, so no extra incentive is needed.)
If they make good choices, no money is deducted from the balance. If, however, they make poor choices, such as being late, she deducts $2.
Freedom to spend their money however they wish works well because they can’t spend what they don’t have. She keeps the cards in her purse and will not lend them money to cover costs.
They’re responsible for tracking the card’s balance. Reloading the card is as simple as visiting the credit union (just one of many ways to reload with no additional costs).
Several months into the experience leaves Cazarez and her family thankful for the credit union’s support and innovative products. Interestingly enough, there’s only one thing Cazarez’s children would change about the experience: They want fun logos on the cards, similar to those appearing on credit cards.
Tapping into the tanda
Another creative way Cazarez and her family exercise financial responsibility is by using tandas, which are informal savings and lending circles.
Tandas are operated globally, and have more than 200 different names that vary from country to country. They’re best described as “a no-interest loan with your friends.”
Here’s an example of how they work: Ten friends, family members, or co-workers get together, and each agrees to give $100 every two weeks to the group's organizer. One person ends up with the whole pot at the end of the month: $2,000.
This goes on for 10 months until everyone gets the pot. Everyone pays $2,000 and everyone gets $2,000. If you get the $2,000 early on in the process, it's a no-interest loan. If you get it later on in the cycle, the tanda acts as a savings account.
“My mother used to do tandas all the time in Mexico,” Cazarez says. “Tandas are helpful if you need money right away and gather people to contribute.”
She’s had her own experience with them as an adult. She and her husband saved $10,000 over the course of a year for a down payment on a house instead of getting a loan.
With tandas, no one pays interest. Because people usually do tandas with family members, there’s an unspoken peer pressure motivating people to pay on time.
The consequences of a missed payment seems like a harsher penalty than a bank default notice. People don’t like to disappoint those close to them.
“I believe if people have the money, they spend it. At least I do,” she remarks candidly. “When you’re in a tanda, you know you have to pay every week so you don’t get off track by thinking or saying, ‘I have $50. I’m going shopping!’”
Of course, there is a real risk. Someone could be the first in the group to get the tanda pot and never return. The leader could skip town with the cash. It happens, yet it’s fairly rare.
Considering newly arrived Mexican immigrants have to trust each other for survival, the circle of trust is far-reaching from neighbors and co-workers to mechanics, seamstresses, baby sitters and interpreters.
In the Hispanic culture, such social connections are critical, especially for those who are undocumented or can't speak English.
Contrast the interdependency with what’s seen in the U.S. where emphasis is given to individuality, individuation, and individual success. That model doesn’t foster the same level of trust.
NEXT: A valuable partnership