As the nation celebrates Independence Day, many Americans think about what it was like for the early settlers arriving on our shores for the first time. Those early pioneers faced much uncertainty when it came to basic survival and the ability to provide a secure future for themselves and their families. Today’s immigrants may not face such extreme conditions, but they do have some significant hurdles to clear when it comes to establishing savings and a credit history.
“It can be very intimidating for new immigrants to grasp all of the complexities of our economy,” said National Foundation for Credit Counseling© (NFCC©) vice president of public relations and external affairs Bruce McClary. “The best approach to a successful start is to focus on basic finance at the personal level.”
To help new arrivals understand some basics about money management in their new country, the NFCC offers the following tips five tips:
Savings – The key to financial stability is savings. The sooner a plan is put into place, the easier it will be to avoid unnecessary debt. The most important thing determining the success of a savings plan is consistency. Make a schedule of deposits and assign them the highest priority in the budget. It is suggested that non-emergency savings equal a minimum of six months of after tax income. Success toward that goal can be boosted by keeping debt out of the way, and manageable within a budget. There are a number of online budget tools that can help make this an easier process, and part of a healthy financial habit.
Establishing Credit – The best way to establish credit is to start small and work toward a larger goal. Without a credit history, it is nearly impossible to be approved for a credit card. There are starter lines of credit with products such as secured credit cards. These are credit cards that require a cash deposit for collateral, do not require a credit check, and allow cardholders to have charges and payment activity reported to the credit bureau. This helps establish a credit history that can be used later to apply for lower interest credit cards, and qualify for auto loans or mortgages.
Avoiding Scams – Faster is not better when it comes to financial success, and there is no magic solution to complex problems. Sadly, there are too many “get rich quick” schemes designed to create false hope and scam people out of their last dollar. Use resources like the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) to learn how to identify and avoid dangerous scams that could cause irreparable financial damage.
Housing – Affordable housing is a challenge, even for those who are not new citizens. The first thing anyone should do is learn how they are protected by the fair housing laws. That information is available from the Department of Housing and Urban Development (HUD). If home ownership is a financial goal, take steps to understand the available options and what programs may be available locally to help make that goal a reality through down payment assistance or homebuyer education.
Retirement – It all comes back to the golden rule of savings, making it a top priority. There are different methods of saving and planning for retirement, including 401(k) and Individual Retirement Accounts (IRAs). Take time to learn how they work and which may be the best option. Above all else, never borrow against future financial stability by withdrawing from these accounts before retirement.