"To be [a first-generation American] is to feel like you’re trying to fix and heal the financial scars of many generations before you and trying to catch up to the other folks who have been generations ahead of you, all in one lifetime," says Berna Anat, a.k.a. "The Financial Hype Woman," a first-generation, Filipina-American financial educator, producer, speaker, and writer.
These two priorities define the financial experience of many first-generation Americans.
In addition to navigating potentially unfamiliar cultural and financial systems, first-generation Americans have obligations and expectations that differ from those who have been in the United States for generations.
And even first-generation Americans who have lived in the United States their entire lives face racist and anti-immigrant rhetoric that can have long-standing and damaging effects.
To find out more about how first-generation Americans manage their finances, prioritize spending, and think about the future, The Motley Fool surveyed 2,000 Americans with at least one parent who was born outside of the United States.
We also interviewed three first-generation Americans making strides in the financial world and supporting their communities -- Berna Anat, and Sunem and Israel Tovar -- to dig deeper into their experiences. You can see highlights from the interviews in the video above.
Read on to learn about first-generation Americans' financial commitments to family members, their retirement planning, and the good habits they've worked to build despite an economic system that's not always helpful.
Key findings
- 49% of surveyed first-generation Americans provide financial support to family members outside of the U.S., while 43% support family domestically. Only 18% said they don't provide financial support to family members.
- 60% of those who provide financial support to family members use more than 25% of their monthly paycheck to do so.
- 67% of respondents said that their retirement planning includes providing for their parents or elders. Over half of these respondents say that this planning creates at least some stress.
- 71% of respondents report helping their parents navigate their finances.
- First-generation Americans have generally built good financial habits, like keeping an emergency fund and contributing to an employer-sponsored retirement plan when it's available.
First-generation Americans support their families with their paychecks
Of the 2,000 first-generation Americans surveyed, an astonishing 49% said they provide financial support to family members in other countries. 43% said they provide financial support to family members in the United States, and only 18% said they don't provide any familial financial support.
| Do you provide financial support to your family? | Percentage of respondents |
|---|---|
| Yes, I provide financial support to family living in another country | 49% |
| Yes, I provide financial support to family living in the U.S. | 43% |
| No, I don't provide financial support to my family | 18% |
We also found that those who provide financial support to their families are using a significant portion of their paychecks to do so. Almost 60% of those who provide financial support to their families dedicate more than 25% of their paycheck to that support:
| How much of your typical monthly paycheck goes to supporting family members? | Percentage of respondents |
|---|---|
| Less than 10% | 8% |
| 10% to 25% | 33% |
| 26% to 50% | 44% |
| More than 50% | 16% |
80% of respondents feel obligated to financially support their parents
The question above didn't require respondents to state anything about the type of family that they're supporting. But when asked specifically about their parents, 80% of first-generation Americans said they feel obligated to provide financial support.
Adding to the unique expectations first-generation Americans often face, a third of respondents said that this obligation was implied, but not discussed:
| Do you feel obligated to financially support your parents? | Percentage of respondents |
|---|---|
| Yes, and this obligation has been discussed | 46% |
| Yes, we haven't discussed it, but it's expected | 34% |
| No | 20% |
"When you are first-gen, you forever feel indebted to the people who helped raise you and helped bring you here. You feel indebted to the people who you 'left behind,' so you want to bring money and resources back to them. It’s this feeling of lifelong chaining yourselves to each other which can feel both enriching and grounding, and also very destabilizing and confusing," says Anat.
Anat’s advice for first-generation Americans navigating these financial obligations?
"Put your financial oxygen mask on first before you help others." By figuring out how much you can realistically afford to give to family and at what cadence can help tremendously in your own financial health and stress.
We'll learn a bit more about respondents' financial relationships with their parents below.
Supporting family members was respondents' second-highest priority
Financially supporting family members was also the second-highest financial priority listed by respondents, just one percentage point behind making enough money to live on. When asked to choose three top financial priorities, here's what respondents chose:
- Making enough money to live on: 33%
- Supporting family members: 32%
- Making the right investment decisions: 30%
- Paying for a child's education: 31%
- Saving for retirement: 30%
- Saving for a financial emergency: 30%
- Making money to travel: 23%
- Getting out of debt: 22%
- Buying a home: 21%
- Other: 5%
Saving for retirement was a priority for almost a third of respondents, but their answers to retirement-specific questions brought more light to this complicated issue.
First-generation Americans' retirement planning includes taking care of their parents
Our respondents' obligations to their families extend to retirement planning. When asked if their retirement planning included providing for their parents or other elders, two-thirds said yes.
This issue was recently discussed in The New York Times, which specifically addressed the children of East Asian immigrants. However, the topic remains relevant to thousands of Americans beyond this demographic.
| Does your retirement planning include providing for your parents or elders? | Percentage of respondents |
|---|---|
| Yes | 67% |
| No | 22% |
| I don't have a retirement plan | 11% |
Of course, providing for family members when you're on a fixed income isn't easy, and it complicates retirement planning. But 63% of the first-generation Americans we surveyed said they feel on track in saving for their retirement, which is heartening. Only 21% said they didn't feel on track (16% weren't sure).
As you might expect, though, planning for retirement as well as parents' or elders' care can result in some stress. In fact, over half of the respondents planning for their elders' care experience at least some stress over the issue:
| Does saving for your own retirement and your parents’ or elders’ cause you financial stress? | Percentage of respondents |
|---|---|
| Yes, it causes a lot of stress | 17% |
| Yes, it causes some stress | 34% |
| Yes, it causes a little stress | 39% |
| No | 10% |
While it's important for everyone to have a retirement plan in place, it's even more important to be prepared if you're going to be supporting family members.
First-generation Americans' financial relationships with their parents extend beyond support, though.
First-generation Americans' parents are relatively knowledgeable, but require help
Overall, our respondents said that their parents were generally knowledgeable about financial matters. Almost 70% said their parents are at least somewhat knowledgeable:
| How would you describe your parents' financial literacy knowledge? | Percentage of respondents |
|---|---|
| Very knowledgeable | 26% |
| Somewhat knowledgeable | 42% |
| Somewhat unknowledgeable | 22% |
| Very unknowledgeable | 10% |
Because parents are such an important source of formative financial habits, it's good to see that first-generation Americans speak highly of their parents' knowledge.
Still, though, almost three-quarters of our respondents report helping their parents navigate their finances:
| Do/did you teach your parents about finances or help them navigate their own finances? | Percentage of respondents |
|---|---|
| Yes | 71% |
| No | 29% |
The fact that these parents are knowledgeable about finances but still need a lot of help could be linked to many factors -- different financial systems between countries, changing financial landscapes in the United States, the rapid release of new technologies, or something entirely different.
It's also worth noting that even though their parents were generally good with finances, first-generation Americans had to relearn a few things. Two-thirds said that they had to unlearn an unhelpful financial lesson taught to them by their parents:
| Did your parents teach you any financial lessons that you've had to unlearn because they're actually unhelpful? (For example, teaching that no credit is good credit.) | Percentage of respondents |
|---|---|
| Yes | 67% |
| No | 33% |
This is especially important to note from the perspective of first-generation financial education. Unhelpful lessons learned early in life can be hard to get rid of, and getting off on the right financial foot can make a huge difference over years of earning, spending, saving, and investing.
“Our parents unfortunately passed down unhealthy relationships with money -- not because they wanted to, but because the circumstances and conditions of growing up in low-income, immigrant households forced them to have that mentality because they were trying to survive," says Israel Tovar, first-generation Latinx-American and co-founder of The Dream Teacher Project.
"Now that we have access to more income and resources, we have to be very intentional about improving our relationships with money because we recognize that we’re not in the same financial positions as our parents."
Despite numerous challenges, first-generation Americans are building good financial habits
Studies have shown that first-generation Americans earn less than the children of U.S. natives. They're more likely to live in or near poverty and face food insecurity. And their parents may not be willing to take advantage of public programs that could help because of "concerns about green card status or other immigration-related reasons."
But our study shows that first-generation Americans are also building financial habits that will help them succeed.
For example, almost 70% of our respondents reported having at least three months' worth of expenses in a savings account, meeting the typical minimum for an emergency fund:
| Do you have enough money in your savings account to cover three months' worth of expenses? | Percentage of respondents |
|---|---|
| Yes | 69% |
| No | 20% |
| I'm not sure | 11% |
On a related note, a full 79% of our respondents report using a budget to manage their expenses. Saving and budgeting are financial habits that will benefit this population greatly, especially as they continue to support family members at home and abroad.
First-generation Americans could use access to more helpful financial products
While these habits will take first-generation Americans far, there are areas where they could fare better. For example,
- only 53% reported owning a savings account,
- 50% have health insurance,
- 17% have a will or estate plan, and
- just under 10% have a non-retirement brokerage account.
“We know that many first-gen folks do not trust traditional financial institutions precisely because their parents do not trust financial institutions for a variety of different reasons. Some of those reasons simply include because they didn’t have access to financial education," says Israel.
"Other reasons, which are more systemic reasons, are that some institutions are predatory. They profit significantly off poor people."
Higher numbers in savings, insurance, and investing accounts would likely help our respondents in the long term. Of course, it's easy to recommend these products -- it might be an entirely different story when it comes to actually getting them. In addition to a general lack of trust for financial institutions, lack of credit scores, full-time employment, and even parental financial support can make it more difficult to get access to these products.
So how can financial institutions build trust and encourage more first-generation Americans to plan for their financial future?
Anat says that hearing from people she relates to made a big difference:
“What got me into investing was repeatedly hearing from BIPOC [Black, Indigenous, and people of color] financial creators who I trust that while budgeting, saving, and getting your credit together are all important, when we want to talk about wealth that will live past you, wealth that will exceed what you’ve accomplished, the kind of wealth that other families have been enjoying for generations on generations, they didn’t get there by budgeting and saving and getting a good credit score. They got there from investing."
(A 2006 Brookings report focused on immigrant families' lack of financial access provides a great background of these and related issues.)
Fortunately, we saw very good numbers when it comes to employer-sponsored retirement plans:
| Do you have access to an employer-sponsored retirement plan? | Percentage of respondents |
|---|---|
| Yes, and I contribute to it | 55% |
| Yes, but I don't contribute to it | 20% |
| No, my employer doesn't offer a retirement plan | 13% |
| No, I'm currently unemployed | 13% |
The fact that first-generation Americans with access to an employer-sponsored retirement plan were more than twice as likely to take advantage of it as not is definitely a good sign.
Of course, finding an employer that offers this kind of plan isn't always easy. And relying only on Social Security isn't a great plan. So those who have difficulty finding full-time employment or a job that offers this benefit could have trouble.
First-generation Americans face unique obstacles but aren't deterred
Based on this survey, it seems clear that first-generation Americans face specific challenges that other Americans may not. A strong emphasis on supporting family influences many of their financial decisions, including how to plan for retirement.
But, despite unique barriers, first-generation Americans are making good decisions. Most of our respondents have sufficient emergency funds and also feel on track for their retirement. They're updating the knowledge passed down from their parents. And they're making use of smart financial vehicles like employer-sponsored retirement plans.
Of course, that's not the whole story. First-generation Americans showed lower usage of some financial products that can help build financial security, like health insurance, life insurance, and a non-retirement brokerage account.
Moving forward with the first-generation community
As a company dedicated to making the world smarter, happier, and richer, improving knowledge and financial access is a priority for The Motley Fool. That includes underserved communities like first-generation Americans.
So what can immigrants and the children of immigrants do right now to start improving their financial lives?
Sunem Tovar, first-generation Latinx-American and co-founder of The Dream Teacher Project, suggests not getting bogged down in collecting information before acting:
"You don’t have to be an expert to get your money right. You don’t have to be an expert to become debt-free or start investing," she says. "Many of us first-gen individuals don’t take action because we’re scared that we need to learn everything before we do it, but you don’t have to be an expert to start."
Israel similarly shares his advice on staying focused on the issue at hand:
"Take a balanced approach to building wealth. You should not feel like it’s your full responsibility to break the cycle of intergenerational poverty. That’s super stressful to think about and it’s not your full responsibility," he advises.
"Just by taking control of your finances, as a first-generation individual, you are already setting strong financial foundations for those who come after you. In fact, you’re changing their financial trajectory. Balance is key in this journey."
This study sheds light on the fact that the first-generation community faces a unique set of obstacles for establishing financial security on a long-term basis. A variety of intergenerational and system factors make it difficult for immigrants and the children of immigrants to build wealth.
Recognizing these issues is the first step in altering the financial landscape to better accommodate every American, regardless of their place of birth, income level, financial literacy, or familial obligations.
Methodology
The Motley Fool distributed this survey to 2,000 U.S. adults via Pollfish on Feb. 9, 2023.
Respondents were 48.15% female, 51.80% male, and 0.05% other. Age breakdowns were approximately 15% ages 18 to 24, 23% ages 25 to 34, 40% ages 35 to 44, 13% ages 45 to 54, and 10% older than 54.
Some percentages may not total to 100% due to rounding.
