There’s something magical about New Year’s energy. It feels like you get a chance to start a new life, much like what you’re doing in your new country. All this change can be exciting and overwhelming at the same time as you figure out how to find your footing.
This moment is also a good time to set some financial goals for the new year and beyond. Setting goals for your finances can make it easier to manage day-to-day affairs and set you up for success in the future.
Identifying a few clear goals is the key to making sure you can follow through. If you’re not sure where to start, we’re here to help. These are our picks for the top three financial goals for immigrants in 2021.
1. Open a bank account in your new country
Opening a bank account is the most crucial financial step for new arrivals to countries like the U.S., the U.K., and Canada. A bank account makes it possible to transfer money from your previous country, to safely use your new income, and to pay bills.
How to open a bank account as an immigrant
Opening a bank account can be fairly simple. You can use either your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) depending on the bank. In some cases, banks may also require a proof of identity such as your passport or other form of US-issued photo ID.
Other items you’ll also need are: money to make a minimum deposit and your current address and phone number.
The Consumer Financial Protection Bureau offers an excellent checklist when researching and opening an account, including questions to ask the bank representative to help you save money on fees.
2. Choose a smart method for sending money home
If you’re like most immigrants, part of your yearly budget is devoted to sending money home to support relatives or fund investments at home.
Sending money abroad using your bank account can work, but it often comes with hefty fees and big markups in the exchange rate.
This year, make it your goal to try a money transfer app if you haven’t already. Choosing an app like Remitly will often save you money in fees, especially as compared to traditional money agents or bank wires. Plus, it’s secure, it’s easy to use, and it doesn’t require you to go to a physical location to complete your transfer.
3. Track your cash flow
Understanding what you’re earning and spending is the foundation for achieving your financial goals. This year, make a plan to keep track of your cash flow. You’ll be surprised by how much it helps you manage your money.
For instance, if you want to save money to book flights back home, you’ll need to know how much you can afford to save. If it’s a stretch to make your rent payments, getting a full picture of your income and expenses can help you determine your ideal budget for housing.
The first step to managing your cash flow is to have a good idea of all the numbers involved in your finances. That means figuring out:
- Your net pay (what you make after taxes)
- Your fixed expenses (regular bills that are the same amount each month)
- Your variable expenses (regular bills that can vary in amount)
- Your occasional expenses (less frequent bills, such as car tabs)
Understanding what your expenses are will help you afford them. That’s because knowing these exact amounts will help you know how much you need to earn to cover them. Subtract your expenses from your net pay, and you’re on your way to a budget.
Once you’ve recorded your income and expenses, take a look at your spending. It’s related to what you just wrote down, with an important difference.
Tracking your spending means recording every time you spend money. This will help determine whether you’re using your money wisely and help you change habits.
Don’t worry! There are many great tools to help you do this. Start with this simple spending tracker from the Consumer Financial Protection Bureau. Try it for two weeks and you’ll be surprised by how much you learn.
Setting goals is meant to help you achieve your goals and dreams. It took a lot of work and drive to move here, so first pat yourself on the back for that. But the work’s not over — arm yourself with the knowledge that you need to keep going.
The more you apply the knowledge you learned towards your goals, the better chance you have at continuing to thrive in your new country.
Learn more: FAQ
How do you choose a bank account?
Before opening a bank account, your best bet is to research the most popular banks in the area where you’ll live. You can also ask for recommendations from those you trust and look up reviews online.
Make sure that you’re choosing a bank that offers all the features you want. Ask about fees, minimum balance required, and their ATM network.
Additionally, find out about their foreign transaction fees on debit card purchases abroad, their interest rates for your savings account, and their online banking options.
How do you know a bank is safe?
Depending on where you’ve lived before, banks can seem intimidating or you may feel that they’re not trustworthy. In general, banks in the U.S., U.K., and Canada are very safe, however.
Financial rules and governing bodies like the FDIC in the U.S., the CDIC in Canada, and the FSCS in the United Kingdom are designed to protect your money. For example, using an FDIC-insured bank in the U.S. means that your deposits are insured up to $250,000. In the event that something happens to the bank, your money will still be there.
In the U.S. it’s very rare for a bank not to have FDIC insurance, though there are exceptions. The Bank of North Dakota, for instance, is backed by the state of North Dakota rather than the FDIC.
How do you figure out your net pay?
When you start receiving your paycheck from your employer, you may notice that it’s less than what your salary is. That’s because your salary number is based on a gross amount, not the net amount after all taxes and deductions are taken out.
Figuring out your net pay is important so that you can figure out how much money you have to work with each month. This amount should help you pay for necessities, other non-essential items and even some for savings.
To understand what your net pay is, you can check your pay stub or ask your employer — it should provide you with a breakdown. In general, federal, state and local taxes will be taken out, plus ones for Social Security and Medicare.
Since each state is different, you can use this paycheck calculator to estimate how much your paycheck will be each month.
For an in-depth guide to creating a budget, check out our recently updated guide here.
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