Whether you are travelling to a new country or have been there for a while, it is no secret that adopting that country’s financial system is challenging. While learning to manage your finances is tricky for some people, it is extra difficult for the immigrants who have to juggle it both at home and abroad.
If you do not consider yourself a financially literate person, you are not alone, as the majority of people who travel overseas face this financial literacy challenge. The good news is that it is never too late to get started.
If you want to make the country you are moving into your new home, one of the first things you need to do is have the immigrant financial education to manage the finances. In this blog, we will take a look at the importance of financial literacy for immigrants.
What is financial literacy?
If we are to give you a simple explanation, financial literacy is the knowledge of how you can tackle your own finances and how general finance systems work. This can imply learning about how you can tackle debt, save money, balance a budget, and pay off credit cards. While the purpose of being financially literate varies from person to person, the biggest benefit is that you have control over your money and be financially independent.
Fundamentals of financial literacy
With finance being one of the most important aspects of our lives now more than ever, it is scary if you are an immigrant living in a foreign country and lack personal finance knowledge. If you lack the understanding of the importance of financial knowledge, you are prone to a number of pitfalls. One of them is more prone to be under massive debts, either via poor spending decisions or lack of preparation for the future. Something like that can lead to severe consequences.
Fortunately, there are now even more resources than ever for those who wish to educate themselves about the financial world.
Benefits of financial literacy
We can simply say that the benefit of financial literacy is to teach individuals how to make smarter decisions. However, there are many other benefits of being financially literate:
- There are different interest rates on floating-rate loans each month, and you also cannot withdraw the IRA contributions until you are retired. Some of the innocent financial decisions you may make today might have long-term complications, irrespective of whether you are making these decisions to plan your immigrant financial success or considering challenging the immigration financial challenges. Being financially literate can help you avoid making mistakes in your personal finances.
- Whether it is about emergency preparedness or saving money, having financial literacy will help individuals step ahead when uncertainty happens. While the impact of a major unexpected expense or losing a job is severe, one having the essential skills for entrepreneurs and financial decision-making skills can cushion the blow.
- With better clarity on how you can save money and make a budget, you can develop better plans, set goals and expectations, hold them accountable for the finances, and establish a course for seamlessly achieving the unachievable goals. While a dream may not be achievable today, if you create a plan and approach, it will be possible to achieve it in the future.
- Take a moment to yourself and imagine that you are making a life-changing decision without knowing much about it. It is scary for everyone! With appropriate financial knowledge, people can confidently tackle major life choices.
Why is managing money important for immigrants?
It goes without saying that immigrant money management is one of the must skills you need to have. In a foreign country, managing money is the same as managing money at your home. Of course, you will have different expenses while living in a foreign country and have to divide your budget accordingly. However, the financial literacy skills you learn in one place will be able to help you out perfectly when you move out to live in a foreign country. Following are the few reasons why it is important for the immigrants to manage money:
- Refrain yourself from racking up unnecessary debts.
- Understand how to properly use your credit card.
- Make a habit of making healthy purchases.
- Save money for your loved ones and retirement.
- Learn how to put money aside in times of emergencies.
Tips for becoming more financially literate
Whether it is for financial empowerment for immigrants, budgeting tips for newcomers, or just tackling your personal finances, there are endless ways you can learn more about finances. And the more you learn, the more new concepts you can jump on next. While you do not have to know everything about finance to be able to manage your finances without any hassle, you certainly need to give yourself some time to understand the basics. Here are some of the tips that will help you kickstart your journey to be financially literate:
- Develop a plan on how you will be able to save money in a foreign country before you actually move to the country.
- While it is vital that you create a budget for yourself from your home before you make the journey to move into the foreign country, it is equally important to develop a budget when you move to the foreign country. The more you practise budgeting, the more you will be efficient and learn more about where you could save more.
- Don’t hesitate to talk to others who are immigrants to the country as well. Talk to them and ask them how they are managing their finances. It is always beneficial to know different approaches and strategies.
- By not spending excessively and paying your bills on time, you can get rid of debts and also avoid any sort of debt. Instead of getting a credit card and risking debt with high interest, consider getting a free debit card that functions like a credit card. By doing so, you are spending the money that you have.
- Look for legitimate financial education resources for immigrants where you can go and read financial topics that are relevant to you. There are many trustworthy resources, from financial podcasts and webinars to blogs and newsletters.
- There are many money management tool apps that can tell you a lot about where you spend the most and other aspects of your spending. It is yet another step towards better small business financial literacy. Having a detailed idea of your spending lets you see the places you need to work for better budgeting.
- Regarding retirement planning, saving, and investing, it is better to start small than not at all. While sending money back home might be a strong priority for an immigrant living in a foreign country; it can also be worthwhile if an individual opens an account for long-term savings.
While creating a budget and setting aside an emergency fund are two of the main pillars of financial independence, there are many other steps you need to consider if you are planning to achieve financial literacy while you are residing in a foreign country. Thankfully, these above-mentioned tips will not only help you set up a budget, but it will also help you become financially literate enough to make the tough decisions.