I was ever willing to write this post and spent hours researching for it. This topic is what I was searching for ever since I landed in this country. I came for work and didn’t know what am I supposed to do to start earning and grow my money.
I wasn’t even familiar with the terms like checking account and 401(k). All I knew from India were Saving/current bank account and provident fund. A CD was familiar to me as ‘Fixed deposit’.
It took time to understand the jargon and took even more time to learn what is useful and what is not. I wish someone told me the things I am going to write here, 7 years ago.
Now about the tips to make yourself comfortable with your money when you reached here in America.
Know your visa rules
Barring exceptions you can only come to United States to work on some kind work visa. Each visa has its own rules and limitations which are unique.
It’s important to know your visa restrictions and rules in order to remain a lawful non-resident. Example, A dependent of a H1 class visa worker can’t work to earn money. They can work voluntarily but employer’s should not pay them. It’s enforced by not giving social security number to them.
It’s sad that more than 500,000 people in US are living as stay-at-home partner without any work. It’s one of the biggest mass of workable and skilled resources that can’t work without any apparent reason, found anywhere in the world. The fact that it happens in world’s most advanced country is a shame!
So, know the rules, make sure your salary in US in not lesser than the minimum prevailing wage in your area, if it is, take up the matter with authority.
It’s important that you get all original paper works, passport, visa, petition, social security cards, etc. from your employer. Your employer should not hold them under any circumstances. If they confiscate your documents, report to USCIS immediately.
Do not stay back beyond your visa/I-94 validity. This may jeopardize your eligibility to work again in US. There are immigration related help forums, run by immigration law firms, you can ask your visa related questions in those forums, if you need.
Most immediate and essential tasks
Arrive at social security administration office for you SSN card, without this card you are not authorized to work. Study driving law and appear for written and driving test as soon as possible. Especially in small cities having a car is almost a must for living. Thankfully there are a number of resources to buy cheap used cars.
Try to rent an apartment in a locality where they do not ask for credit history. if they do, because you do not have a credit history in US, you may not be permitted to rent. Try to get a place to stay nearby your work location as driving a car would take time. For me, it took 2 months. Fortunately we had friends to give us ride to work and stores till the time I got the car.
The first thing to know about money is to gain knowledge about taxation. Depending on your state of resident, you may need to pay a state tax in addition to federal income tax. States with no state tax, generally earn revenue by means of higher sales taxes. So don’t feel blessed if you happen to work in states with no state tax.
Almost certainly your federal income taxes will be deducted from your pay check automatically. They can deduct more which you can get back (without interest) by means of filing tax return. Familiarize yourself with the latest tax brackets and rates.
Glance through the ways to reduce income taxes and if possible take steps. like every country, US too reward certain good behaviors which help the society in general. The reward comes in form of tax deduction. Make yourself eligible for those deductions to reduced your tax bills. IRS website has every ting that you may want to know about US taxes.
Apart from income taxes, you will have to pay mandatory social security tax and medicare tax. You may not stay here that long to enjoy social security benefit or Medicare benefit, still you have to bear burden of current aging population.
Get familiar with insurance
Due to some reason this country dug its own hole of medical care. Although there are ways to live without a health insurance, you’ll probably not survive being a non-resident visa worker without an insurance. Unless your employer sponsor your health insurance premium, you are required to have one just to survive the astronomical health care cost. This is a must inquire items for you with your employer.
There are other insurances you need to take. So get yourself accustomed to the US insurance system. You can’t get around for long without a car, and, it’s illegal to drive a car without an insurance.
Unless you are coming here with bagful of gold, you’ll not need a renter’s insurance ( assuming you’ll be renting initially). You may also ask about employer sponsored group life insurance plan. Most employers have it.
Comparison shop for Auto insurance as your employer will not provide this for you. You may not be familiar with right hand driving or the free-way system. take a few driving lessons even if you have been a driver in your country. Appear for written test and get a learner’s permit first.
Remember you’ll save 1-2% in car insurance premium if you pay 6 month’s premium at once, instead of paying monthly amount. If you have to drop insurance for any reason, you can get back the prorated money back
Investing your Money
If you are in United states for temporary assignment and plan to go back, try for options to remit money to your home country and earn money if interest rate over there is better. You’ll not earn more than 3% interest in a risk free instrument here. Off-course currency exchange rate is a crucial factor here. (don’t forget to report overseas investment income in your US federal tax return)
Many if you ask question on feasibility of investing in retirement plan such as 401 (k), IRA or Roth IRA.
There is no straight answer. I have invested in all of them because of two reasons.
- Employer match in my 401(k) plan, which is free money to me
- I am planning to stay back in this country.
If either of the above is true for you, go ahead and invest in retirement plan. Even if you are in US for only a few years, you should invest in 401(k) to get advantage of employer match.
Remember that if you want to withdraw your retirement money before certain age limit, you’ll have to pay regular income tax, plus penalty.
I strictly advice you not to open IRA/Roth IRA if you are here for short-term. You’ll lose money instead of securing better future in retirement. If you do then don’t take it out before reaching 59.5 years of age.
About other ways of investing, build up an emergency fund, don’t siphon-off entire earning to your home country. Your insurances have deductibles, do keep twice or thrice of that amount with you in a checking account where your salary is deposited.
Most probably this checking account would not earn you any interesting, causing a devaluation of your local saving over time to inflation. It’s wise decision to open a CD or a saving account to earn a little interest on it. I sadly see a lot of temporary visa workers keeping the entire saving in their checking account.
Don’t lose any documentation
Its one of the important and fundamental monetary skill. All the accounts you open in US, make sure to nominate a beneficiary. In a foreign country documents like Passport, Visa, petition papers, social security card, Driver’s license/state ID card, bank account information and other legal documents are costlier than the money required to get them. Don’t lose them and prevent them from disasters.
One of the reasons you chose to work in this country is to draw a significant saving. There are various ways to cut cost while living here. Fortunately for this one, I am able to give you resource links to two of my award-winning past articles. Hope they will be of help.
Hope this article was useful to you, don’t forget to leave your opinion/valuable suggestion in comments section.