Moving to a new country is full of exciting opportunities, but it also comes with challenges—particularly when managing finances. Immigrants are often faced with unfamiliar systems and unexpected costs, making it easier to fall into financial traps. Unfortunately, these money mistakes are common, but with the right knowledge and strategies, they can be avoided.
Remitly is committed to helping our customers navigate the challenges of moving abroad. In this blog, we’ll explore the most common mistakes immigrants make and how to manage your finances more effectively when moving to the UK.
Find the right bank
One of the first steps immigrants face is opening a bank account. However, confusion about available options or requirements, such as proof of address or identification, can delay this critical step. A common mistake is relying heavily on cash, which is risky and limits financial growth opportunities.
Tips:
- Research banks in the UK before moving.
- Compare account fees, withdrawal fees, and overseas transaction fees.
- It’s a good idea to open a current account as quickly as possible to securely manage your income and payments.
Build good credit
A good credit score is essential in the UK for everything from renting accommodation to obtaining loans. Many newcomers aren’t aware of the importance of a credit score, and might not know the consequences of over-reliance on credit cards. Misuse of credit can lead to high-interest debt and leave a long-lasting mark on your credit score.
Tips:
- Start small by applying for a secured credit card or a basic credit card with manageable limits.
- Pay your balances on time and avoid maxing out your credit limit to build a strong credit history.
- Keep an eye on your credit score with free services like ClearScore.
Avoid the debt trap
It’s tempting to use credit cards or high-interest payday loans to cover expenses, especially when unexpected challenges arise while you’re settling into the country. But while they promise a quick fix, these loans can quickly lead to unmanageable debt and cost you far more than they’re worth in the long run.
Tips:
- Set aside an emergency fund to cover unexpected costs.
- Compare loan options carefully, considering interest rates and repayment terms—a loan from a bank often carries much lower interest than credit cards.
- Avoid borrowing more than you can repay comfortably.
Challenge #2: Budgeting for unfamiliar costs of living
Budget for the unexpected
Overspending is a common issue when moving to a new country, especially one like the UK, which has a relatively high cost of living. When faced with unfamiliar products in the supermarket, unexpected expenses that may pop up from time to time, and unknown prices for transport and other everyday tasks, it’s easy to feel overwhelmed.
Tips:
- Take time to compare prices of food and everyday essentials in different supermarkets and shops to find the best deals.
- Track your income and all expenses using tools like budgeting apps or spreadsheets.
- Categorise expenses as essential (e.g., rent, utilities) and non-essential, and allocate funds accordingly.
Don’t forget to save
It’s easy to underestimate the importance of saving when trying to meet day-to-day costs. However, skipping savings in the short term can jeopardise long-term goals. Ask yourself what you really need in the initial months and prioritise those necessities, while setting aside whatever you can for savings. You may have to skip some luxuries and indulgences to stay on track, but it’s worth it for long-term financial security.
Tips:
- Adopt the 50/30/20 rule: 50% of your income for necessities, 30% for discretionary spending, and 20% for savings.
- Use your banking app to automate savings deposits to build a habit of consistent saving.
Use tech to stay on track
Keeping track of your money manually can be time-consuming and tricky, especially when adjusting to life in a new country. Without the right tools, it’s easy to lose track of where your money goes.
Tips:
- Try using apps like Monzo, Emma, or You Need a Budget (YNAB), which are popular in the UK. These tools help you see all your spending in one place, organise your expenses into categories, and set savings goals.
- Many apps also send you alerts if you’re spending too much, making it easier to stay on top of your budget and save for the future.
Challenge #3: Building your career
Be aware of barriers
Finding a well-paying job can be a challenge for immigrants due to unfamiliarity with the UK job market, unrecognised qualifications, or language barriers. These obstacles can feel discouraging, but with the right approach, they can be overcome.
Tips:
- Tailor your CV to UK standards—this includes focusing on achievements, using clear formatting, and avoiding overly personal information like photos or birth dates. Highlight transferable skills that show your adaptability.
- If English isn’t your first language, improving your proficiency can make a big difference. Take language courses, practice conversational skills, or earn certifications like IELTS to boost your confidence.
- Websites like LinkedIn, Reed, and Indeed are excellent tools for job hunting, and local job centres often provide free guidance tailored to your area.
Upskill to stand out
In today’s competitive job market, failing to invest in professional growth can limit your career advancement and earning potential. Employers in the UK often value candidates with modern, in-demand skills such as digital literacy, communication, and teamwork. Upskilling doesn’t just improve your CV—it shows employers that you’re proactive, adaptable, and ready to learn.
Tips:
- Look into online learning platforms like Coursera, LinkedIn Learning, or even free YouTube tutorials to develop new abilities.
- Fields like coding, digital marketing, data analysis, and project management are particularly sought after.
- If you prefer hands-on learning, explore local training programmes or community colleges for affordable options.
Build your network
A strong professional network is key to accessing better opportunities, but many immigrants struggle to connect with others in their industry. Without a network, it can be harder to hear about job openings or gain valuable career advice. Networking may take time, but it can lead to job referrals, mentorship opportunities, and valuable insights into your industry.
Tips:
- Start by attending networking events, career fairs, or industry-specific meetups in your area. Many events are listed on platforms like Meetup or Eventbrite.
- Joining local community groups or participating in volunteer activities is another great way to meet people while contributing to your new community.
- Online forums, LinkedIn groups, and alumni associations are also valuable for building connections.
Challenge #4: Learning to maximise your savings
Explore investment opportunities
Many expats delay investing because they’re unfamiliar with the options or fear financial losses—or they just have too much on their plate when settling into a new place. However, investing is essential for building long-term wealth and achieving financial stability in the UK. Starting small and learning as you go can make investing less intimidating.
Tips:
- Beginner-friendly investment options like Stocks and Shares ISAs—which allow tax-efficient savings, or low-risk index funds—which spread your money across a variety of investments to reduce risk, are helpful resources to use.
- Platforms like Vanguard, Nutmeg, or Hargreaves Lansdown are designed to be user-friendly for newcomers and offer guidance to help you make informed decisions.
Diversify to minimise risk
One of the biggest financial mistakes new investors make is putting all their money into a single investment, which can lead to significant losses if things don’t go as planned. Diversifying your investments is a simple yet effective way to reduce risk and achieve steady growth, allowing you to create a more stable financial foundation.
Tips:
- Build a well-rounded portfolio by spreading your investments across different asset types, such as stocks, bonds, mutual funds, and even real estate.
- Start with small contributions and gradually increase them as your confidence and financial knowledge grow.
Set financial goals
Without clear financial goals, it’s easy to get sidetracked or spend without direction. Having specific goals not only helps you stay focused but also motivates you to save and invest consistently.
Tips:
- Use the SMART framework to set goals that are Specific, Measurable, Achievable, Relevant, and Time-bound. For instance, aim to save £10,000 for a house deposit within five years, or build a three-month emergency fund within six months.
- Break larger goals into smaller milestones to make them feel more manageable and track your progress regularly.
- Set short-term (in the next few years) and long-term (in five or more years) goals to keep your financial plan on track.
Challenge #5: Understanding tax obligations
Know your tax responsibilities
Many immigrants are unfamiliar with the UK’s tax system, leading to errors such as failing to file taxes correctly or missing deadlines. A common mistake is underestimating how taxes impact income or neglecting to register with HM Revenue and Customs (HMRC) if self-employed.
Tips:
- Find out your tax obligations under the UK tax system as quickly as possible.
- If employed, ensure you’re on the correct tax code to avoid underpaying or overpaying.
- For self-employed individuals, register with HMRC promptly and track all income and expenses to simplify your self-assessment tax return.
Understand National Insurance contributions
National Insurance (NI) contributions are another area of confusion for newcomers. These payments fund state benefits such as healthcare and pensions. Many immigrants don’t realise that NI contributions are mandatory and deducted from most types of income. On the positive side, this system gives you access to public universal healthcare and a pension, so make sure to take advantage of the benefits you’re entitled to.
Tips:
- Check your NI number upon arrival, as you’ll need it for employment and tax purposes. If you don’t receive one automatically, apply for it immediately.
- Keep track of your contributions to ensure they align with your earnings.
Avoid penalties for late payments
One of the most important financial mistakes immigrants make is failing to pay taxes on time, resulting in penalties and interest charges. Late payment can also affect your financial stability and creditworthiness.
Tips:
- Mark key tax dates on your calendar, such as the self-assessment deadline (usually 31 January).
- Set aside funds regularly for tax payments, especially if you’re self-employed, to avoid scrambling for money when the due date arrives.
Challenge #6: Finding reliable support and resources
Leverage trustworthy resources
Many immigrants miss out on valuable support simply because they aren’t aware of the resources available. Others, unfortunately, fall victim to scams, such as phishing emails claiming to be from trusted organisations like HMRC, asking for personal information or money. Seeking good advice and staying informed is key to avoiding unnecessary struggles or pitfalls.
Tips:
- Organisations such as Citizens Advice provide free, impartial advice on financial, legal, and housing matters.
- Take advantage of local government resources and centres to ask for assistance.
- When in doubt about a message or offer, verify its authenticity by contacting the organisation directly through official channels.
Seek professional advice tailored to expats
Navigating financial decisions like tax planning, saving for retirement, or investing can be overwhelming in a new country. Without proper guidance, it’s easy to make costly mistakes or miss opportunities that could improve your financial standing.
Tips:
- Consult a financial advisor who specialises in working with expats or immigrants. They can offer tailored advice on navigating the UK’s financial landscape.
- Look for professionals with transparent fees, positive client reviews, and credentials from reputable organisations like the Chartered Institute for Securities & Investment (CISI).
- Seek out community organisations focused on immigrant support.
Educate yourself
Adjusting to the UK’s financial systems takes time and effort, but it’s an investment in your future. From understanding the basics of budgeting and saving to grasping more complex topics like taxes and investing, financial literacy is essential for long-term success.
Tips:
- Take advantage of trusted resources to build your knowledge. Read books or explore blogs and YouTube channels tailored to immigrants in the UK, including our own Remitly blog.
- Local libraries, workshops, or online platforms like Khan Academy and Coursera can also offer useful courses and content.
- Stay vigilant and verify the credibility of every source before acting on their advice.
Building a secure future
Immigrants face unique challenges when adjusting to life in a new country, but common money mistakes can be avoided with the right knowledge and preparation. By understanding financial systems, budgeting effectively, and leveraging resources, newcomers can build a secure financial future. Whether it’s setting up a bank account, creating an emergency fund, or investing wisely, each small step contributes to long-term stability and success.
Remember, achieving financial stability isn’t just about avoiding mistakes—it’s about building habits that align with your goals. Remitly is here to support you in creating sustainable financial habits.
FAQs
What are the financial issues faced by immigrants?
Immigrants can face various financial challenges like understanding new systems, accessing credit, high living costs, and limited financial literacy.
What are the largest barriers to higher-paying employment for immigrants?
Major barriers to higher-paying jobs for immigrants include lack of local experience, unrecognised qualifications, and language proficiency.
What are two mistakes Americans often make when it comes to money?
Two common mistakes Americans make are relying too heavily on credit cards and neglecting long-term savings.
What is the best UK bank for immigrants?
Banks that make it easy for immigrants to open a new account include Lloyds, HSBC, Monzo, and Barclays.
