Emigration to another country is always a fascinating and at the same time a highly stressing process. Money management is one of the best determinants in the lives of immigrants who newly arrived into the United States and one that can easily swing either way depending on how it is approached.
Thus, this guide is created to present key recommendations that will be useful for new immigrants to avoid common mistakes and have a stable financial basis for their Life in the USA.
Understanding the financial system
The importance of credit scores
Thus, credit scores are very important in the United States and are used in virtually all of the financial activities including renting an apartment or applying for a loan. Credit score is basically a numerical summary derived from your history of credit, which depicts how creditworthy one is.
Since new immigrants are likely to have no credit history, one should try to establish it at the initial stage possible. The first simple tool to build credit is a secured credit card. These are especial credit instruments that require that the borrower deposits an amount which acts as a security on the funds borrowed.
It will be to your advantage if you use this card responsibly, and make payments on time since this is how you start to create a good credit score. This will in the long run help in improving your credit and hence help you get better deals in terms of financial products.
Navigating the banking system
Banking is an important activity for a newcomer and should be commenced immediately after the immigrant begins the assimilation process. Selection of the respective bank as well as the kind of account has a great influence in the appropriate manner of handling with one’s finances.
Some of the large scale banks includes: Chase, Bank of America, and Wells Fargo and they provide many types of accounts for use, including the checking account as well as the savings account.
Some of the considerations to make when choosing a bank include; the cost, convenience, friendliness, and whether the bank offered online banking services. Furthermore, it is possible to combine having an ATM card with the possession of the needed sum of money in your savings account that earns interest.
Budgeting and expense management
Having a budget is one of the most crucial principles for the newcomers in terms of economical management. Budgets allow one to track the amounts that are available or have been spent; thus, develop ways of saving to ensure they do not spend beyond their means.
Income statement begins with the display of all possible income sources that may range from wages, freelance income and any other form of income. Then divide your expenses into the necessary ones and those that are not necessary for your survival.
Necessary expenses include housing, utilities, food, transportation, and others basic needs; and the luxury expenses are eating out, movies, and other anything that is not necessary to survive.
Budgeting your expenses implies that you will be able to know areas that you have been expending a lot of money and cut on those expenses so that you can save for investment.
Building a secure financial future
Emergency funds and savings
An emergency fund is a kind of insurance where an individual is financially secured in the event of hardship that requires him or her to have money than no money at all. The optimal size of an emergency fund should be around $1000- $2000, or enough to cover three to six months of living expenses.
Begin this by putting aside a certain amount of money each month in an attempt to realize this goal. You open an emergency fund by opening a high yield savings account helps you to obtain growth in your emergency fund faster since the high yield savings accounts yield higher rates of interest as compared to the normal savings account.
Investing for the future
Savings is one of the most effective ways through which an individual can build up riches in the long run. Since joining the American society as a new immigrant it is crucial to draw some knowledge on investing and opportunity that is available in the States and which may include the stocks, bonds, mutual funds and accounts for retirement.
Savings for profitable investment, can line one’s pockets, liberate an individual from the rat race, and provide for a comfortable retirement. Firstly, it is necessary to get acquainted with the types of possibilities for investment and their potential profit and losses.
Institutional money shops offer free educational materials and the tools required for a new entrant. If you still need some help, it is also wise to consult your financial planner and give him/her your specific objectives and your tolerance towards risks.
Maximizing financial opportunities
Education and skill development
Spending on education and acquiring skills provides an opportunity to change the employment status and increase income levels. For the new immigrant, improving one’s skills or getting further education may increase his or her chances of getting well-paid employment.
Search through schools and colleges that can help you meet your career objectives, certification programs and training courses. These include community association colleges and the use of online facilities for learning at a cheaper cost and flexibility.
In the same way, some employers may offer facilities whereby the employee is sponsored to further his or her education or attend a professional course of his or her choice, without having to spend so much.
Planning for taxes
It is also important to learn the US tax system to be able to plan for the future well adequately. Every newcomer has to learn about tax requirements, dates, possibilities to minimize taxes, and more.
Taxes can be filing complicated, in particular if a person is not familiar with the procedure. It is advised to consult a Tax professional or use Tax software to fill taxes with precision and within the right time. Low-income taxpayers can also get free tax preparation help from many organizations in local communities.