It happens everywhere: Latinos arrive in a new American town, work and save like crazy, and within a few years, voilà! They’re opening businesses and buying homes. At a time when the rest of us are choking on major credit card debts, immigrants often save a fifth or more of their income and are 30 percent more likely than nonimmigrants to open a business.
How do they do it when the average immigrant earns just $11 an hour? It’s simple: While most transplants start out poor in funds, they are rich in social ties and draw on personal relationships—not high-interest loans—to save, spend and build up their money.
Following these six simple cues from our immigrant brethren might just be the best thing you ever do for your wallet.
Invest in People, Not Just Stuff
“The majority of immigrants come here with just one financial goal: to help their families,” says Omar Garcia, a staff member at the Mexican Consulate in New York City. That focus on aiding others (versus accumulating material wealth for themselves) is part of what makes immigrants such good savers.
When New York arts educator Aurora Olivares* wants to save for a big-ticket item, like a pair of $300 Geox boots that she recently had her eye on, she’ll usually fall short of her goal with an impulse buy. But she manages never to touch the $1,000 she saves each December to send to her Mexican immigrant mother in L.A. Working an extra job during the holiday season left her with no weekends, “but I just kept thinking about what it means for my mom,” she says.
There’s actually science behind Olivares’s commitment: A number of studies show that when we donate money or gifts to others, our brains release chemicals, such as oxytocin, that make us feel happy, sociable and relaxed. En cambio, when we spend cash on expensive items for ourselves, we’re more likely to experience feelings of anxiety or guilt. So if you’re having trouble saving up for a lavish vacation or that plasma TV, try putting away dollars for your sister’s college tuition instead. Maybe she’ll become a doctor one day—a clear benefit for everyone.