We know it´s hard to move to a new country and figure out the financial system. There is no easy way to find information about what financial moves you need to be doing. It is difficult to find resources about what you should be trying to learn. We know because we´ve been there. And that´s why we created Immigrant Finance.
Here are 5 financial moves you can take in your first few months as a new immigrant in a new country to set yourself up for success. These moves will help you get your feet wet learning about the financial system and how to take advantage of the many opportunities here to make money and build wealth. Most importantly, they will set up smart personal finance habits for you to start doing from the very beginning, which will pave the way to your success for many years.
1. Open a bank account
It´s a really important to open a bank account because you need somewhere safe to put your money. If you keep all your money in cash, it is risky. You could lose everything in a minute, for example if you get robbed.
Banks in the U.S. Are Different From Banks At Home
In many countries, people do not trust the banks. That makes them afraid of the banks everywhere. In the U.S., immigrants are much less likely to open bank accounts than people born who were born here. One big reason for that is fear, and not understanding that certain banks in the U.S. can be trusted.
My husband, for example, comes from a country where the bankers basically took all of the people´s money and fled the country. This all happened when he was growing up. The government didn´t have any way to insure the money people had put into the banks, so people lost everything.
In the U.S., you can feel pretty safe about money you have in a savings account if the bank is \”FDIC\” insured through the Federal Deposit Insurance Corporation (FDIC). That means that if something terrible happens, like a huge economic crash, you are covered if the bank loses your money. The government will make sure you get your money back (for up to $250,000 of money that is put into a single account with an FDIC-insured bank).
Immigrants Can Open Bank Accounts
If you are an immigrant, you can open a bank account in the U.S. A lot of immigrants don´t know that they can open a bank account. People think that if they do not have legal immigration status they might not be able to. But that´s not true.
The issue is more about getting the right identification number and finding the right bank that will accept it. The most common way to open a bank account is by using a social security number. Many immigrants with legal status can get a social security number. If you do not have legal status, you can get an Individual Taxpayer Identification Number (ITIN). Many, but not all, banks will let you open a bank account with an ITIN.
2. Figure Out Your Fixed Monthly Expenses
Your fixed monthly expenses are the things you have to spend money on every month no matter what. They are the most basic bills you must pay each month to live in basic comfort. These fixed expenses include rent, groceries for food, utility bills such as electricity and water, and transportation costs to get to work. Unless you are living on the street or have someone paying expenses for you, these are the expenses you have to pay to eat food, have shelter, and continue to work.
Having a good sense of your fixed expenses is important for two reasons.
First, if you know your fixed monthly expenses, you know exactly how much money you need to find a way to earn each month in order to survive. That gives you a clear goal to work toward meeting every day. Of course, you will want to aim to earn more than that. But since you´re just starting out, it´s ok to take small steps. Living in a new country, that is something to be proud of. It´s ok for your goal to be to make ends meet and survive. Finding a way to make the amount of money that is equal to your fixed monthly expenses is a significant accomplishment.
Second, knowing your fixed monthly expenses is crucial because it helps you manage your extra money. If you can find a way to make more than the total of your fixed monthly expenses, you will know exactly how much money you have left over. With the amount you have left over, you can use it however you want. You can put it directly toward your goals, whatever they may be. But it\’s important that that extra money serves you, instead of just getting spent with no purpose.
Click here to grab your free Goal-Driven Budget System Worksheet!
3. Sit Down and Decide Your Goals for the Next Six Months
If you are able to make more money than the amount of your fixed monthly expenses, go you!! Congratulations. We know that´s not an easy feat.
The last thing you want to do is just spend that hard-earned money aimlessly, waking up at the end of each month with no idea where it went. To build the life you want, you gotta have a plan for that money. You need to put it to work for you. That´s where clear financial goals come in. When you are dealing with uncertain times, clear financial goals are the best way to take action, get control over your future, and make a change.
You probably have several goals in mind for how you might want to use that money. Maybe you want to send it back to your family at home. It may be a priority to pay off debt. Perhaps you want to save for a trip or to buy a home. Maybe you just want to have some fun to give yourself a break from all that hard work, damnit.
Think About Your Top Financial Goals
Go ahead and think through all your goals and what is most important to you, at least for the next six months. You can always adjust or change your goal at anytime. Then think about what the most important one or two goals are.
Having a clear goal in mind now will give you focus and direction of what to use that money for. You can direct a certain amount of money each month toward that goal. For example, if your goal is to buy a new winter coat for your child, you can start putting even just $20 away a month until you have enough to buy that coat to keep her warm.
4. Start Saving For an Emergency Fund
One goal we highly encourage for everyone, regardless of whether you are in immigrant or not, is to save up for an emergency fund. This is also known as a rainy day fund. An emergency fund is a chunk of money you have saved up in a bank account for times when you really need it. Emergencies that you may need to rely on your fund might be if you lose your job, have an accident that leads to high medical bills, or have a family emergency.
Personal finance experts generally recommend having an emergency fund amount equal to about six months of expenses. So if you and your family need $2,000 a month to survive, your goal should be to have $12,000 stashed away in a bank account for emergencies.
Emergency Funds Are Power
Emergency funds are so crucial, guys. For example, if you lose your job, your emergency fund can give you a six month cushion to live off. This can help you for a few months while you search for other jobs. It can also give you the flexibility to wait a couple months to take the right job. An emergency fund can give you the freedom to not have to be forced to take the first job you can get because you need to put food on the table.
We know it doesn´t sound fun to put your hard-earned money away for something that hypothetically might go wrong in the future. It´s not very inspiring.
But let us tell you, emergency funds are power. Having an emergency fund available gives you a sense of security and the peace of mind of having a Plan B always. Even if you don´t end up needing to use it, knowing it´s there gives you the confidence to take risks. If you make a risky career move, you know you will be ok for at least a few months if it doesn´t work out or if you lose your job.
Having an emergency fund frees up your money mindset too. You can worry less about day-to-day survival and living paycheck to paycheck, because you know you have a plan. You can have the brain space to start to think about the next step, such as how can I increase my monthly income? How can I learn some new skills so I can do a job that I like doing every day? What can I do to start investing to build wealth? What\’s the best way to reach my full potential?
5. Read Books and Listen to Podcasts About Personal Finance
As a newly arrived immigrant in a country, it´s important to learn about the basics of that country\’s financial system. As they say, knowledge is power. The more you can teach yourself, the better chance you will have of making smart financial decisions. This will also help you avoid big mistakes.
Reading personal finance books is a great way to self-educate and self-empower. Here is a post with some our favorite personal finance books here at Immigrant Finance.
We also love podcasts as a free way to educate yourself about personal finance. Some of our favorite podcasts are Afford Anything, So Money, Paychecks and Balances, Make Money Your Honey, and Financially Savvy in 20 Minutes.
Your first few months living in a new country as a new immigrant are downright HARD. You have so much to adjust to and learn about, and a lot of those things come down to money. By following these 5 important steps — opening a bank account, figuring out your fixed monthly expenses, deciding your goals for the next 6 months, starting to save for an emergency fund, and educating yourself about personal finance — you will be off to a great start.
Do you want to build wealth in a new country, but feel not sure where to even begin? Sign up for a free 30 minute Immigrant Finance personal finance coaching session. We\’ll work together to identify what areas you need to focus on and set up some steps to get your basic finances in the U.S. set up.