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Financial challenges are everywhere, whether you are from the United States or not. But the financial challenges for immigrants are much more difficult to navigate if you try to do it alone. The differences here in America versus your home country could be significant, and if you don’t know the differences ahead of time, they could send you on a tailspin.
Here’s how to handle the financial issues you face and rise above them.
You may have built credit in your home country, but it does little to help you here in America. Credit isn’t transferable from country to country - you have to build credit here in the United States and it’s one of the largest financial challenges for immigrants.
At first, it may seem difficult. You need credit to get credit, but there are simple ways for anyone to start, including immigrants.
Apply for a secured credit card - A secured credit card is the easiest type of credit to obtain. Your credit line is equal to your deposit. Let’s say your credit line is $500. You’d have to put down a deposit of $500. If you use the card and don’t make your payments on time, the credit card company keeps the $500. After 6 - 8 months, you can usually apply for an unsecured credit card and/or upgrade your secured card with the same company (some do it automatically). If you upgrade or close the credit card, you’ll receive the deposit back.
Apply for a credit builder loan - This isn’t really a loan in the traditional sense. It’s a way to build up a credit score by having a trade line that reports to the credit bureaus. The lender providing the credit builder loan keeps the principal amount in an interest-bearing account. If you make your payments on time, the lender reports the timely payments to the credit bureau. At the end of the term, you receive the principal balance plus any interest back, and you have a positive trade line.
Become an authorized user - If you have family here with established credit, ask to be an authorized user on a credit card. Authorized users don’t have to use the credit card to get credit. As long as the credit card company reports to the credit bureaus and your family member pays his/her bills on time, you’ll get the good credit.
Understanding the Terms as they Relate to Finances
If English isn’t your first language, the language barriers can be intense. Financial decisions are difficult and overwhelming when English is your first language, and when it’s not, it could be near impossible and be one of the larger financial challenges for immigrants.
Dealing with your finances means many things including:
Choosing the right checking and savings accounts
Learning how to invest here where it may be different from in your country
Understanding mortgage financing and personal loans
Knowing how to interpret closing costs, loan costs, and interest rates
Understanding how to negotiate the best loan terms
Knowing how to determine a scam from the real deal
If English isn’t your native language, you may misunderstand something, make the wrong decision, or worse yet, get taken by a scam. That’s why it’s important to have a company you trust on your side - a company that understands your limitations and helps you navigate through them carefully, allowing you to make the decisions yourself.
No Bank Account
When you first come to America, you more than likely won’t have a bank account. Checking and savings accounts are crucial to your success here. Almost every transaction you conduct will require the use of funds and unless you’re keeping your money under your mattress, you’ll need a safe place to store them.
Without a bank account, you can’t pay your bills, pay for store purchases (except with cash), or sign up for memberships or subscriptions. If you don’t have a bank account, you have to resort to money orders and cashier’s checks, which cost money and are a hassle to get.
Almost every aspect of your life requires a bank account. It’s easier than you think to get bank accounts and with the right help, you can choose the accounts that meet your needs the most.
Bank accounts cost money, which may not seem like a big deal, but if you misunderstand the costs, you could pay a lot more than intended for a simple bank account.
Getting help securing the right bank account, understanding how it works, and what you need to do (electronic statements, regular direct deposits, or meet minimum balance requirements) is important.
Making International Transfers
If your family back home still relies on your income, you may need to make international transfers often. Sending money via Western Union or MoneyGram may be feasible, but expensive.
Without a bank account, international transfers have high service fees. Sometimes it’s not possible to send money home, especially as you get yourself set up here. Dealing with the cost of moving to America, setting up your housing, and getting your life situated is expensive.
Once you have the money to send to your family, there are many money transfer services available that are affordable and fast, but you have to get to that point first.
Misunderstanding of Cultural Differences
Sometimes, it’s a lot easier to work with people from your own culture. Whether you’re looking for banking services, financial advice, or money transfers, working with people from your culture has an unannounced understanding that makes you feel at ease.
This is especially true if English isn’t your first language and you need help communicating your needs. Talking to someone who speaks your first language helps improve the line of communication and ensure your financing needs are met.
This is especially true when working with potential loan situations, especially a mortgage. Buying a home here could be one of the largest investments you make. If you are overwhelmed with the language used and the terms thrown around, it could make the problems even worse. But working with someone who understands your culture makes the process much easier.
Overcoming Financial Challenges for Immigrants
Don’t let financial challenges for immigrants hold you back from setting up roots in the United States. If your dream is to come to the US and get a great job, and set down financial roots here, you can do it.
Make sure you have the right support by your side - a company who understands the trials and tribulations of coming here as an immigrant and who will help you through them. The obstacles are surmountable and with the right help you will conquer them too.
About the Author
Sahil Vakil is the Founder & CEO of MYRA Wealth – a Registered Investment Advisor (RIA) in NY/NJ that provides Personal Finance services to International & Multicultural individuals in the United States – a large majority of whom are 1st & 2nd generation immigrants. As a 1st Generation Immigrant himself, Sahil is on a mission to make MYRA Wealth the “home away from home” for this vibrant and thriving International & Multicultural community.
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