As a recent arrival in the United States, there are a few considerations that need to be made in order to make your transition successful. The tax code, health care system and workforce rules all vary widely from other countries.
For example, where are the best places to live? How can you manage your finances in a new country? What are your initial steps right after moving?
This post explores five financial tips for successfully moving to the United States as a freelancer.
1. Start building credit from scratch
The United States works with a specific set of rules when it comes to building and establishing a history of credit.
Your credit score, also known as a FICO score, is a number that financial institutions use to determine the likelihood you’ll pay back a new loan.
This allows companies to determine your eligibility for how much money you’ll be approved for, along with the other terms such as the interest rate, loan timeline and fees.
You won’t have a history of credit right away so you’ll have to start building credit from scratch. There are many methods for doing this, but the best way is to simply manage your money properly by never paying bills late and not overextending yourself with credit.
Financial companies in the United States make it very easy to apply for new credit cards, each with their own line of credit. While this can be a helpful way of building credit, it’s also an easy stumbling block for getting into a lot of debt.
Aim to be financially responsible and you’ll have a decent credit score in no time.
2. Choose the right financial institution
When moving to the United States, one of the first things you must do is choose the best financial institution to house your money.
As you begin getting a work visa you’ll start receiving money from your new job. Within the U.S. there are many different kinds of financial companies and services available.
Here’s a list of the various financial institutions and accounts they offer.
These institutions often have a wide variety of offerings as well multiple branches across the country. This makes is very convenient for customers who want access to their funds at all times.
Commercial banks offer products such as checking accounts, savings accounts, loans for vehicles or mortgages, personal loans and even credit cards.
Credit unions and local banks
A credit union or local bank may have limited locations in comparison to commercial banks but they generally offer better customer service. In addition, accounts and loans offered by credit unions usually come with better interest rates and lower fees.
Investment companies and brokerages
Investment banks and brokerages can help house multiple types of currencies as well as get you set up with an investment portfolio. While these institutions offer checking and savings accounts, as well as some loans and credit cards, they also allow you to access to investment or legal advice.
It’s important to note, however, that investment brokerages often come with much higher fees to compensate for the expertise at your disposal.
Some up-and-coming financial institutions include online-only banks. Since there are no physical locations to maintain, online-only banks are able to keep their overhead costs low and can therefore pass these savings onto their customers.
They offer especially helpful services for international residents who may be looking for flexible money options.
3. Consult a finance professional
The United States tax code is extremely complicated and has specific implications for people who’ve moved here. Because of this, it’s important to consult with a tax professional or financial advisor as soon you as you move to the U.S.
A tax professional is similar to your doctor; the more honest information you share with them the better they will be able to help you and set you up for the future.
The details you divulge to them are completely confidential so you can feel confident in honestly sharing your financial situation.
One action to take is to take time to research whether or not there’s a tax treaty between the U.S. and your homeland. “These tax treaties can help you reduce taxes while in the U.S.,” says Rachel Michaelov, of Empire Tax Professionals.
The exact details of how your finances will be impacted after moving can be defined by a finance professional.
The best way to find a qualified tax professional in your area is to search the Internal Revenue Service’s directory. This will give you a list of the Accredited Business Accountant/Advisor and Accredited Tax Preparers in your area and who specialize in immigrant tax situations.
4. Budget for a new cost of living
The cost of living various widely from different states and different areas of the country. In a 2016 cost of living survey performed by Mercer, the most expensive cities in the U.S. included New York, San Francisco and Los Angeles.
The coastal areas will often be more expensive than the southern or midwestern states. Likewise, cities that host international airports, such as Dallas, Denver or Seattle, will have a higher cost of living than in more rural areas.
You may want to avoid these highly-populated areas in favor of more cost-effective cities such as Portland, which was listed as one of Mercer’s least expensive cities.
Cost of living includes all of your expenses related to everyday living. When researching the best cities to live in, to take into account housing, food, childcare, transportation, taxes and healthcare costs.
Each state has it’s own laws and taxes regulations, so it’s important to review all of the pros and cons — preferably with a finance professional who understands the local laws.
5. Save money on international payments
Sending money back and forth abroad often comes with high fees. Whether you’re sending clients invoices for work you’ve completed, or simply sending money to friends and family, there’s no reason to overpay.
One way to circumvent this is by using a service like TransferWise. They have a simple calculator that allows you to convert U.S. dollars into any currency, without paying a lot of fees.
This post was written by me and originally published on TransferWise.com, a company that makes sending money internationally cheaper, faster and easier.