What you need to know to get your financial house in order
Moving to a new country is, without a doubt, one of the most exciting events in life.
The joys of experiencing a new culture, cuisine, and set of customs; the new cities; the countryside; and, perhaps, even a language to explore – as Saint Augustine famously said, “The world is a book and those who do not travel read only a page.”
In addition to the joy, however, moving entails its share of stress: visas, housing, employment, schools for the kids. And, in order to make everything else work, the need to master a new financial system. “But America’s the land of the free,” you may be saying, “a nation of immigrants.” While that may be true, it doesn’t make the sprawling fifty-state federation any less tricky to navigate.
Fortunately, you’re in luck: we’ve prepared this quick guide of the most important things to know when moving to the U.S., zeroing in on those pesky finances. Read on.
- It’s a big country; choose wisely: In a country as big as the United States, the cost of living across regions and states can vary as widely as the geography, climate, and culture. To top that off, state and local laws can differ more, state-to-state and county-to-county, than in countries with more centralized legal systems. In short, New York is not Nebraska and San Francisco sure ain’t San Antonio.
- Get it all started with a bank account: As in American supermarkets, where rows and rows of breakfast cereals await you, there is also a bewildering choice of banking options. These range from commercial banks, which have the benefit of convenience and multiple branches, to credit unions, which may offer more personalized customer service, to investment companies which, in exchange for higher fees, will help you manage everything from basic checking to sophisticated investments. Each of these offers its own slate of accounts with differing requirements, so it pays to shop around. And if you already bank at an institution that has a U.S. presence, you may be able to open an international account before you even get to your new home!
- Start building up credit: One of the most difficult things about moving from abroad is the lack of a credit history, without which anything from a car loan to a mortgage may be out of reach without a co-signor. With the debit card that comes with your bank account, you will start to be able to build up your FICO score. Other options that are usually available to recent arrivals include department-store charge cards. Credit cards are also available – and often easier to acquire in the U.S. than in other countries – but be careful. It is precisely in the first months of adapting to a new country, before steady income has started coming in, that depending on credit can become a temptation. To build positive credit and ensure you’re not in debt, make sure that you never spend more than you’re able to pay back, and pay your credit card bill on time.
- Be aware of tax issues: As a “non-resident alien,” you will have to pay tax on income earned in the U.S. Once you qualify for “resident alien” status, however, your income will be taxed like an American citizen. Which means – and this comes as a surprise for many – that your worldwide income is subject to tax, not just what you earn in the U.S. Check to see if your country has a tax treaty with the United States, which may entitle you to reduce or eliminate U.S. tax in areas such as pensions, interest, dividends, royalties, and capital gains. Also, a financial advisor can help you determine how best to set up your investments before moving to avoid being unnecessarily clipped by the Internal Revenue Service (IRS).
- Have pension, will travel: Although you will have to pay into the American Social Security for at least ten years before qualifying for retirement benefits, here’s the good news: you may be able to transfer your own pension plan with you. UK residents, for example, can transfer their pension to a qualifying US plan through the Qualifying Recognised Overseas Pension Scheme. It’s worth seeing what arrangements your home country has in place.
With some careful pre-trip planning in these areas, you can spend less time worrying upon your arrival and more time enjoying all that America has to offer, from its cities to its national parks, sports, film, and a vibrant multi-racial, multi-ethnic culture. Welcome!
Planning a move or just arrived in the U.S.? To get familiarized with banking in the U.S., we have curated eight educational modules, which you can access via the HSBC Financial Wellness Center:
Written by Everfi Inc working in partnership with HSBC Bank USA, N.A. The view and opinions expressed in the article are those of Everfi Inc. and do not necessarily reflect the views and opinions of HSBC.
HSBC offers the Modules for educational purposes only and they should not be considered professional or investment advice. While HSBC is pleased to offer the Modules as an educational service to our customers, HSBC does not guarantee, warrant or recommend the opinion or advice or the product and/or services offered or mentioned in these Modules. Any opinions, judgments, advice, statements, services, offers or other information presented within a Modules are those of a third party and not HSBC. For a comprehensive review of your personal finances, always consult with a tax or legal advisor. Neither HSBC, nor any of its representatives may give legal or tax advice.
HSBC does not guarantee the accuracy of the translations of modules provided in a language other than English that maybe provided. If you decide to open an account with HSBC, please be advised that documents related to your accounts will only be available in English and services provided may also only be in English.
For your convenience, HSBC may establish links within these Modules to one or more other websites or blog posts independently operated by third parties. HSBC has no control, oversight or responsibility over any such other websites or contents therein. The existence of any such links shall not constitute a warranty or an endorsement by HSBC of such website, the contents of the websites or the operators of the websites. You access them entirely at your own risk.
HSBC refers to HSBC Bank USA, N.A., HSBC Securities (USA) Inc. and HSBC Insurance Agency (USA) Inc. HSBC Bank USA, N.A. provides banking products and services. HSBC Securities (USA) Inc. provides investment products and services and is an affiliate of HSBC Bank USA, N.A. HSBC Insurance Agency (USA) Inc. provides insurance products and services and is a wholly owned subsidiary of HSBC Bank USA, N.A.