Fernanda Reyes / iStock.com
Commitment to Our Readers
GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Trusted by
Millions of Readers
If you are a first-generation American, you may be the first in your family to navigate banking systems or be in a position to grow your wealth. It’s a lot of pressure but also comes with many opportunities.
“I’ve noticed that first-generation Americans often face unique financial hurdles,” said Kevin Shahnazari, the founder and CEO of FinlyWealth. “Many come from families where financial literacy wasn’t taught, or cultural differences affect money management styles.”
Below are some key strategies to help first-generation Americans build financial security.
Start by Establishing a Solid Banking Relationship
When Shahnazari works with first-generation clients, he often stresses the importance of having both checking and savings accounts at banks insured by the Federal Deposit Insurance Corporation (FDIC).
In his experience, some people from immigrant families could be hesitant to trust banks due to their experiences in other countries.
Shahnazari tells these clients, “Your money grows through trust — trust in secure financial institutions and trust in your own financial decisions.”
Using an FDIC-insured bank can give first-generation Americans peace of mind; In the event of a bank failure, your money will be protected.
Building Credit Should Be a Top Priority
“I often see first-generation Americans starting with zero credit history, which can make everything from renting an apartment to getting a job more difficult,” said Shahnazari.
He recommended starting with a secured credit card, which minimizes risk while building a credit history.
“One of my clients, a recent college graduate whose parents never had credit cards, started this way,” he continued. “Within a year, she qualified for a standard card and saw her credit score rise above 700.”
Understanding and Maximizing Workplace Benefits Is Crucial
According to Shahnazari, not all first-generation Americans are familiar with employment benefits, leading to them not fully utilizing these perks in the workplace.
“I always say, ‘Your salary is just the beginning — your benefits are where real wealth-building happens.’”
He advises his clients to take full advantage of 401(k) matching, health savings accounts and educational reimbursement programs.
Protection Should Be a Cornerstone of Your Financial Plan
“I’ve seen too many first-generation Americans skip crucial insurance coverage, trying to save money in the short term,” said Shahnazari. “However, proper insurance — health, life, disability and property — protects the financial foundation you’re building.”
Thanks!
He continued, “One client initially resisted getting renters insurance, but when a fire in his apartment building destroyed his belongings, he was grateful for my insistence on coverage.”
Education Is Vital
It’s hard to build wealth without understanding the ins-and-outs of personal finance, especially when it comes to things like taxes and retirement planning.
“The U.S. tax system can be overwhelming even for lifelong citizens,” said Shahnazari.
If you’re a first-generation American, he recommends reaching out to a tax professional who can breakdown concepts like deductions, credits and long-term tax planning strategies. He also suggests saving early and regularly for retirement.
He said, “Many [of my first-generation clients] come from cultures where family provides retirement support, but in the U.S., personal retirement saving is essential.”
Nischay Rawal, a certified public accountant (CPA) and the founder of NR CPAs and Business Advisors, LLC also believes education is crucial. It even played a significant role for him as a first-generation American.
“I worked multiple jobs to pay for an accounting degree, then earned my CPA,” said Rawal. “Continuously improving your education and skills creates opportunities. Mentorship was key; I sought advice from successful first-generation Americans and built a network, leading to new clients and partnerships.”
Set Clear Boundaries and Get Creative
Rawal also noted that “balancing family obligations with personal financial goals can be tricky,” because many first-generation Americans feel responsible for supporting family members here and in their country of origin.
“I work with clients to create a sustainable plan that allows them to help their families while securing their financial future,” continued Rawal. “This might mean setting clear boundaries or finding creative ways to offer support without compromising personal financial security.”
One truth Rawal shares with all his first-generation clients is this: “Financial security in a new country isn’t built overnight, but with each informed decision, you lay another brick in your foundation of success.”
Diligent Saving and Investing Are Crucial
As a teen, Rawal started saving 10% to 15% of each paycheck.
He said, “Over time, small amounts grew into a nest egg for college or starting a business. I invested in index funds and real estate, like a duplex to live in while renting the other unit. Rent covered the mortgage, providing cash flow and equity.”
Though circumstances were challenging, he said the rewards of his smart choices were significant.
“Success is possible through education, community support and letting your money work for you over time,” Rawal added. “Small amounts, compounded, lead to security and options. With the right mindset, first-generation Americans can achieve their vision of the American dream.”
Source link
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.