Are you moving to US for work? I moved here in 2005 from India on a work visa. In this post I’ll write about things to do in initial days. How financial system in US looks like and what you should do protect your family and property, invest your money and most importantly, how can you save money in this expensive country.
I was ever willing to write this post , I 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 safe-keep and grow my money. I had a high paying job but didn’t know how to invest our savings.
I wasn’t even familiar with the terms like checking account and 401(k). All I knew in India were, Saving/current bank accounts and provident fund (retirement saving account). A CD was familiar to me as ‘Fixed deposit’!
It took time understanding the jargon and took even more time to learn what was useful and what was not. I wish I was told the things I am going to write here, after 7 years of living in US.
Now about the tips to make yourself comfortable with your money when you reached here in America. Learn the essential money skills for staying in US.
Know visa rules - before moving to US
Barring exceptions you can only come to United States for work on some specific 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 employers can’t pay. It’s enforced by not allocating social security number.
It’s sad that more than 500,000 people in US are living as stay-at-home partner without any work. Here is the biggest pool of workable skilled resources that can’t work without any apparent reason.
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 less than minimum prevailing wage in your area. if it is, take up the matter with authority.
It’s important that you keep original paper works- passport, visa, petition papers, social security cards, etc. 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 task – upon reaching US
Arrive at social security administration office for you SSN card, without this card you are not authorized to work. Give it a couple days for your entry record to reach social security office from homeland securities. Do not visit immediate next day upon landing in US.
CAR and driving
Study driving rules, a visit to local license office can get you the rule book. Appear for written test and get a learner’s permit firs, then learn driving. Appear for driving test as soon as possible. Especially in smaller cities, having a car is must. Thankfully there are a number of resources to buy cheap used cars, like craigslists.org, cars.com, etc. Your colleagues may have have cars for sale.
Don’t ask your colleagues/friends living in US, to let you drive their car, no one will give you unless you have auto insurance.
As soon as I got my driver’s license, I took out a rental car. basically I couldn’t save enough money to buy a car, and, without credit history I wasn’t able to get a car loan. So, we had to drive rental cars for few months.
Place to stay
Try renting an apartment in a housing association where they do not ask for credit history. If they do, because you do not have a credit history, you may not be permitted to rent.
Also, try to get a place nearby your work as driving a car would take time. For me, it took 2 months. Fortunately we had friends to give us ride till the time I got rental car.
Know the taxes - within few days of reaching US
The first thing you should know about is taxation. Depending on your state of residency, 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 at the end of the year. Generally you’ll need to file your tax return by April 15th, dates vary.
You should check with your colleagues on a tax preparer. On your first year I’d recommend you hire a tax expert for filing return. This is just to avoid risk of filing on your own and committing mistakes.
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 reduce your tax bills. IRS website has everything you 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.
Remember, income from abroad is taxable and you must declare your abroad investments to IRS at the time of filing tax return. Also last but not the least, inform IRS about all your address changes, you may face penalty otherwise.
Get familiar with insurance sytem – as soon as possible
Medical care is extremely costly in US. Although there are ways to live without a health insurance, you’ll probably not survive being a non-resident visa worker without a medical plan.
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 item 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.
So having Auto (when you own a car) and medical insurance is a must.
Unless you are arriving here with bagful of gold, and keeping them with you, 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 employer sponsored medical plans offer group life insurance, check if yours does.
Comparison shop for Auto insurance to lower your premium, 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.
Investing your Money – within the first year
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 2% interest in a risk free instrument here.
Of course currency exchange rate is a crucial factor. 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 applies to you, go ahead and invest in a 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, if they offer a match.
Remember, if you want to withdraw your retirement money before certain age limit, you’ll have to pay regular income tax, plus a 10% penalty. So, do your math carefully.
I strictly advice you not to open IRA/Roth IRA if you are here for a 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.
In case you plan to stay on and eventually gain citizenship, you better start contributing in retirement saving plan right away. There are various ways to prepare for your retirement.
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 comes in.
Most probably your checking account will not earn you interest, causing your saving to lose value to inflation (current rate above 2%). It’s wise decision to open a CD or a saving account to earn a little interest on your savings, still the rate is less than inflation rate. Hopefully very soon rates will start their upward journey once federal reserve lets the rates rise.
I sadly see a lot of temporary visa workers keeping the entire saving in their checking account, an avoidable financial decision. There are so many ways to invest your money in USA, some of which I frequently write about.
Don’t lose your documentation – never
It’s an important and fundamental monetary skill. All the accounts you open in US, make sure to nominate a beneficiary, be it your spouse or children, even your parents.
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 duplicated. Don’t lose them. We have a bank locker where we keep our valuables and documents.
All major brick and mortar banks (there are many internet based banks out here) have safe deposit lockers in their branches. Visit a local branch and check if there’s an empty one available on rent.
Saving money – from day one of reaching USA
One of the reasons you chose to work in this country is to draw a significant saving. But living here is costly as well.
But, there are various ways to cut cost. Fortunately, for this one, I am able to give you resource links to two of my award-winning articles. Hope they will be of help.
Almost anything you can buy over internet. And generally internet items are cheaper. So before making any major buying decision, like furniture, etc check the price online. You may find a store that offers cheaper price with a free home delivery.
How to build credit history – when you start earning
To get a credit card, to get a car and to get your home you’ll need credit history. Even apartment association and utility companies ask for good credit history. Having a good credit history is must for any one living in US.
Open a checking account and a secured card to start building credit. No one will give you a full-fledged credit card without a credit history. A secured card is probably the best way to build your credit.
After using that secured card for 6 months or so, go for your first credit card application. There are plenty of articles I posted to increase credit score and better credit history. Here’s the best one I could find on web.
Continue to follow my finance blog to save wisely and invest smartly. Thanks for reading this post. Welcome to the land of opportunity!