Financial planning checklist for newcomers to the U.S.

Why it’s important to have a financial plan?

Moving to a new country can be both exciting and overwhelming all at the same time. It’s exciting because it’s something new and different. There’s so much to learn. There’s so much to do. 

But it can also be overwhelming for those same reasons. When you move to a new country, what you find is that although there may be some similarities to your home country, there are also many differences with the way things are done, especially when it comes to money and financial planning. 

I know this from first-hand experience. When I arrived to the U.S. in 2013, I had no idea how to open a bank account or which bank I should choose. 

I certainly didn’t understand the importance of establishing and building credit or how to file taxes or if I even needed to file taxes if I wasn’t working. 

Luckily I was able to learn a lot along the way, through friends and family and a lot of research. I put together my key findings in a quick and easy checklist to get you up and running.

In this financial planning checklist, you will learn the basics of setting financial goals, how to open a bank account, how to start saving, how to build credit, how to start planning for retirement, and a few other key financial considerations. 

Financial Planning Checklist

  1. Set your financial goals
  2. Open a bank account
  3. Start saving
  4. Get a credit card
  5. Start planning for retirement
  6. Set up an emergency fund
  7. Enroll in a health insurance plan
  8. File your taxes

Set your financial goals

Many of us move to America for many different reasons. Some want to explore career opportunities. Some are trying to escape harsh social and economic conditions. Some want a way to help their families, while others simply want to live in a new country. 

But one of the most common themes among newcomers to the U.S. is a chance at a better life. And securing a better life starts with carefully planning your personal and financial goals. 

Planning your financial goals involves creating a list of all your goals and planning how you are going to make those goals a reality. Examples of financial goals include:

  • Buying a car
  • Purchasing your first home
  • Paying off credit card debt

Ways of achieving those goals include:

  • Creating a savings plan
  • Getting a promotion
  • Earning a certain amount
  • Switching careers to earn more money

Being new to America means you have a fresh start to achieve your personal and financial goals. Based on your goals and current situation, you get to plan exactly how you are going to achieve your goals. 

How to set your financial goals?

 Financial Planning Checklist

As with any goal, your financial goals should be SMART. This means they should be:

  • Specific
  • Measurable
  • Attainable
  • Realistic
  • Timely

What worked for me was writing a simple list of all the things I wanted to achieve financially. By writing them down, I was able to get them out of my head and on paper, and then I could work towards achieving those goals.

I could also always refer to my list to see if I was on track or if I had been slacking off. Having a plan or even a rough outline will help to take you one step closer to achieving your financial goals. 

Open a bank account

One of the first things you need to do after you have settled into life in America is to open a bank account. In this day and age, everyone needs to have a bank account. And there are many options available to you in America. 

You can choose from traditional banks that have physical locations, or you can even try online banks that allow you to open a bank account online without having to visit the location.

I know back home, opening a bank account wasn’t as easy as you would think. The account opening process required so many documents and paperwork, including three references, proof of employment, and official signatures from a legal professional. 

Luckily in America, the process of opening a bank account is quite simple, and in many cases, you can open an account online. 

Once you have a valid I.D., the major consideration is choosing the right bank to open your account. As mentioned before, there are many banks to choose from, and each have their own advantages and disadvantages.

A bank account gives you a safe and secure way to store your money, and these days bank accounts offer many other benefits, including savings and checking accounts and access to other financial planning tools and resources.  

Start saving

Financial Planning Checklist

After you open your bank account and start working, saving should be a key priority in your financial plan. Saving allows you to start building your financial net worth and is a good way to start building wealth.

Saving also allows you to have a nest egg to fall back on in case of an emergency, and it can also help you to take advantage of potential investment opportunities, as you have the cash on hand to act quickly.

Most banks also pay interest on the money stored in your savings account, but you can usually get better returns if you explore other investment options for your savings. 

How to start saving?

Many people find saving difficult, especially with so many bills and expenses, but saving even a small percentage of your salary consistently can help you towards achieving your financial goals. 

If you find it difficult to save, try out automated saving tools that automatically transfer a portion of your salary into your bank account each month or however often you set it up. 

I have always been a saver, but what I will admit is that while saving is important, it’s also important to explore investment opportunities that will generate more returns on your investments than just a regular savings account.

Get a credit card

financial planning checklist

When I first moved to the U.S., I didn’t think I needed a credit card. After all, I had my debit card, and I budgeted and managed my expenses pretty well. In fact, I didn’t apply for a credit card until almost three years later. 

But what I soon realized is that a credit card was a great way to start building my credit. Pretty much having good credit allows you to qualify for lower interest rates when you need to borrow money. 

Whether you are borrowing money to buy a car or to buy a home, good credit allows you to finance the cost of the purchase for less because you will get a lower interest rate.

If you don’t have good credit or no credit score at all, then you will either have to pay a much higher interest rate or worse you won’t get approved for the loan.

Credit cards are also useful for emergencies, and depending on the type of credit card you have, you can qualify for cash back or points on certain purchases. 

The trick to having a credit is to make sure not to get caught up in a cycle of debt. If you buy something using your credit card, make sure to pay off your balance as soon as possible to avoid very high-interest rates and late payment fees.

Start planning for retirement

As soon as you settle into your new life and have secured a job, you should start planning for retirement. Planning for retirement means you start saving towards your retirement goals. 

Retirement planning is something that is often overlooked by newcomers to the U.S. Largely due to lack of knowledge and uncertainty as to where to start.

But planning for retirement doesn’t need to be difficult or scary. In fact, there are many ways you can start planning right away.

Related: Four Steps to Start Planning for Retirement

Enroll in your company’s 401(k) plan

If your company offers a 401(k) plan, you should enroll immediately. A 401(k) is an employer-sponsored retirement plan that lets you save for retirement and usually has tax benefits. Most companies also usually offer some sort of match to the amount you contribute to the 401(k).

Open an individual retirement account 

You can also open an individual retirement account, often referred to as an IRA. An IRA is a special account specifically designed for saving for retirement. They are not the same as a regular savings account and offer many benefits that a savings account doesn’t offer.

Learn more about IRAs, 401(k) plans and how to start saving for retirement.

The sooner you start planning for retirement, the better off you will be. Not only will you have the security and peace of mind in knowing that you have a plan in place for the future, but your money will continue to grow through compounding interest. 

Set up an emergency fund

Apart from your regular savings and retirement accounts, you should also set up an account for emergencies. 

Whether it’s a medical emergency, home repairs, car repairs, natural disasters, or even unexpected job loss, you need to have money set aside just in case.  

According to a survey conducted by close to 40 percent of respondents suffered an emergency that cost more than $5,000 within the last year and “more than a third would need to borrow the money in some way – either with a credit card, personal loan or from family or friends,” to pay for the unexpected emergency. 

We never know what life will throw us, but we can take steps to prepare for any eventualities. Having an emergency fund set aside will help you to offset any unexpected events that occur.

Enroll in a health insurance plan

One of the many things you will learn about life in the U.S. is that the cost of healthcare is extremely high.  

Compared to other countries, the U.S. has the most expensive healthcare system. This is largely due to the high costs associated with day to day health care and prescriptions.

The high cost of healthcare has been an ongoing issue in the U.S. and is usually a central part of political debates and is often used as a central talking point during presidential elections.

The out of pocket costs of healthcare is even higher if you are not enrolled in a health insurance plan. 

When I first started working, the company didn’t offer health insurance as a benefit, and when I researched private insurance, the monthly premium was ridiculously high. So I didn’t have health insurance for a while. 

But doctors’ visits were costly. One particular visit was more than $500. I barely sat down with the doctor for 15 minutes, and he really didn’t provide a prescription or solution. He wasn’t even able to diagnose what was going on, and yet I was stuck with the ridiculously high medical bill. 

That’s when I realized you need to have health insurance to cover health care and unexpected emergencies. 

If your company offers a healthcare plan, you should enroll. Employer-sponsored health care plans help to offset the costs of monthly health insurance premiums as the company pays a portion, and you pay the rest.

If you’re unemployed or your company doesn’t offer health insurance benefits, look into government-subsidized health insurance plans. 

There are many different health insurance providers and plans to choose from, so make sure to do your research to find the best plan for you and your family. 

File your taxes

Filing your taxes is an important part of taking care of your financial responsibilities to yourself and the U.S. government.

Each year U.S. citizens and permanent residents must file their taxes with the Internal Revenue (IRS). The deadline to submit your tax returns is April 15, but if you need an extension, you can apply for one as well.

You can file your taxes yourself, or most people use an accounting service like H&R Block, Turbo Tax, or their own private accountant.

Several factors affect your tax situation, including the state you live in,  your employment status, if you are self-employed, relationship status (married or single), if you own your own home, or if you have children or dependents, among other things. 

So be sure to work with a qualified tax professional to ensure you file your taxes correctly, and you don’t end up owing the government.

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