The Ultimate Guide to Personal Finance for American Immigrants

The Ascent Staff
By: The Ascent Staff

Our Research Experts


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Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

What do you want your future in America to look like? Planning for that future means managing, saving, and investing your money.

You likely know just how to do that in your home country. But in the United States, the terminology and rules of money management might seem a little confusing.

Don't let that confusion keep you from a secure financial future.

A solid American immigrant personal finance plan should involve these key components:

  • Opening bank accounts
  • Building up credit
  • Knowing how to send remittance payments
  • Understanding mortgage lenders
  • Creating a retirement account
  • Using credit cards

Where should you start?

A bank should be your first stop, as it can provide the most fundamental American personal finance tools. Your bank may even offer all of the products we mentioned above. Once your credit score is rising and your money is secure, you'll be ready to seize the American dream.

But you'll need to get your documentation ready first.

How to get a Social Security number

Financial institutions require proof of your identity, and for American citizens, that means providing a Social Security number (SSN). It takes time, patience, and documentation to get that number. But the effort is well worth it.

If you were born in this country, you may already have an SSN. Some hospitals sign children up for this document before their moms leave the hospital. If you don't have the number and can't find your card, you'll need to follow the same steps used by noncitizens.

If you're not an American citizen, you can get an SSN by

  1. Finding the Social Security office near you. The Social Security website can help you locate the nearest office.
  2. Bringing immigration documentation to the office, including your Lawful Permanent Resident Card, admission stamp, Form I-94 (Arrival/Departure Record), or Form 1-766 (Employment Authorization Document/EAD).
  3. Bringing proof of your age to the office, such as your birth certificate.
  4. Completing an application in the office.

Your card will be mailed when the office has verified your information. There's no fee for this service, and the card is free. If you're not eligible for an SSN, you'll get that notification in the mail, too.

If you can't get an SSN, you could instead use an individual taxpayer identification number (ITIN) issued by the Internal Revenue Service. You can get one by:

  1. Visiting a Taxpayer Assistance Center. You can find the closest office online.
  2. Bringing identification documents (passports, drivers licenses, and USCIS documents will work) to the office.
  3. Filling out form W-7 in the office.

Your card will appear in your mailbox in about seven weeks.

It may seem like a hassle to get these little pieces of identification, but they're critical for banks, credit card lenders, and others. Your financial identity is tied to this number, and without it, you'll find it difficult to move forward with your financial future.

How to open a bank account

Looking for a place to store your money? You'll need a relationship with a financial institution. Banks typically offer two types of accounts.

  • Checking accounts are for day-to-day transactions. You'll put money in and take it out relatively quickly.
  • Savings accounts help you set aside money for future use. You might take money out of this account rarely, if at all.

Ideally, you'll have both types of accounts to work with. Your checking account helps you cover your expenses, while your savings account helps you save for the future.

To open an account, you need to provide proof of your:

  • Name
  • Date of birth
  • Street address
  • Identity

Your passport, birth certificate, utility bills, and driver’s license should have the information you need. You'll also need your SSN or ITIN to complete the process.

With all your documentation ready, you can start shopping for the right bank partner. Not all financial institutions offer the same perks and benefits, and some come with drawbacks. It pays to be picky. Look for an institution that provides:

  • Insurance. A bank should protect deposits through the Federal Deposit Insurance Corporation (FDIC). A credit union should use the National Credit Union Association. This means your funds are safe even if the bank goes out of business.
  • Convenience. Don't work with a bank you can't visit regularly, either in person or online.
  • Reasonable fees. Some banks charge monthly fees, such as maintenance fees or inactivity fees, as well as check and ATM fees. Understand the costs before you sign up, and look for accounts that do not charge these fees.
  • Customer service. Make sure you can get help if you have a problem. Work with a bank that can quickly assist you in a language you understand well.

Over time, you'll build a relationship with your bank, and as we mentioned, many banks offer all the financial solutions we discuss here. Be picky about your bank, as this institution will be a key part of your financial future.

How to build a credit score

Can you be trusted to pay back borrowed money? Have you ever failed to repay a loan? American lenders want to know the answers to questions like this before giving you loans. To get those answers, they look to one number: your credit score. This figure gives lending institutions a snapshot of your habits and your trustworthiness.

Your credit score is attached to your SSN or ITIN, which is why it's crucial to get those digits.

Here are the five factors that determine your credit score, listed in order of importance:

  1. Your payment history: If you’ve always paid your bills on time, this will be reflected well in your score. If you have a history of paying bills late or not paying them at all, expect your score to take a serious hit.
  2. The amount you owe: When it comes to your credit score, owing some money isn’t necessarily a bad thing. You just don’t want to owe too many people too much. Aim to utilize up to 30 percent of your available credit.
  3. The length of your credit history: A long credit history boosts your score. It shows you have a trustworthy track record of paying back what you owe.
  4. Your mix of credit: A car payment, house payment, and credit cards can show a balanced picture. This is better than only holding one type of debt.
  5. Your percentage of new credit: Attempting to open several new lines of credit in a short period of time can drag down your score.

Some of these factors you can control, and others you can't.

How can you make your credit score as high as possible? Take these three steps to build credit:

  1. Demonstrate credit trustworthiness. Borrow funds and pay them back on time. That proves you keep your promises.
  2. Don’t borrow as much as you can. Ideally, only borrow up to 30 percent of your limit. Aim to borrow only what you need, and never borrow the maximum you’re allowed.
  3. Pay bills on time. If you don't pay your bills, your creditors can submit reports about your poor habits. Each report hurts your credit score.

Each time you borrow money, your lender will run a credit check.

How to send money back home

Building up your finances here is crucial to your success, but you won’t forget about your family back home. If you're hoping to send the people you love a bit of money, you'll need to do research to avoid high fees.

A bank can send money to your family through an international wire transfer. Funds move electronically from one account to the other, and they typically arrive in several days. This is safe, but it can be expensive.

Money transfer providers like Western Union can send money with fewer fees, and they can sometimes push the money into a new account a bit quicker than a bank. But it's easy for someone to set up a fraudulent money transfer shop and steal your money.

You have the right to understand all the fees you'll pay before the transfer starts. Ask about fees pertaining to:

  • Transfer fee. What's the base fee that you'll pay for an outgoing international transfer?
  • Exchange rate. If the money must be delivered in a currency other than dollars, are there fees for that exchange?
  • Taxes. Will you be charged taxes, or are they waived?

Some providers use estimates to tell you how much you'll pay. Don't be afraid to push for hard numbers, and if something seems unusual, keep shopping.

Next, dig into the details of the company you're considering. Have they been in business for a long time? Can you find them online? Have people that you know used this company? If you can't answer yes to these questions, then you may want to look elsewhere.

How to get a mortgage

A home can be an exceptional investment. The house you buy can work as security for other loans you need.

While buying a home may be smart, it's not easy. A home is a big purchase, and saving up the cash to buy it outright could take you years. A mortgage lets you buy a house with a small up-front investment, so you can get into the home now and pay for it over time.

Your bank will likely offer mortgages, though you may prefer to work with a company that specializes in home loans. Some mortgage lenders may have offices near you, so you can walk right in. Others operate online only.

These are large loans, and as a result, lenders ask for a great deal of paperwork and verification before they'll cut you a check. You'll need to provide proof of:

  • Your identity. Some lenders require an SSN, but others accept an ITIN.
  • Your income. Lenders require evidence of your salary, your tips, your child support payments, and more.
  • Your debt. You'll need to demonstrate how much of your paycheck goes toward other loans you've taken out.
  • Your down payment. Typically, banks require a cash deposit for the home.

Your mortgage broker will give you a list of all the documents you'll need to bring for your loan application. Every item on that list is mandatory. You can't skip even one, or your broker can cancel the loan.

When you're approved for the loan, your lender will also need to check out your potential home. The house you choose works as a security for the loan, and it must be worth at least as much as you want to borrow. Inspections are required, and as the buyer, you might need to pay for them.

Going through this process with one lender may not be enough. Some banks have high fees and high interest rates, so you should shop around to make sure you aren't paying more than necessary.

When the sale is complete, you must pay your mortgage off on time. If you miss a certain number of monthly payments, the bank can repossess your house.

All your loan details, including the total amount you owe and what happens if you don't pay, should be explained to you before you sign. If you struggle with English, make sure your company provides an interpreter. You'll need to make sure you understand all the details beforehand.

How to open a retirement account

A home can be a valuable asset in retirement, but you'll still need money in savings to cover your expenses once you're done working for good. By opening a retirement account and putting as much money into it as possible, you can save up enough money to relax when you become a senior.

Some illegal residents may qualify for Social Security retirement benefits to help them through their older years. But those benefits don't apply to all illegal U.S. residents. Those without visas, for example, may not qualify for Social Security. Without those benefits, you'll be solely responsible for paying all your bills when you retire.

Your employer may offer you a great way to save for retirement if you are a noncitizen legally working here: a 401(k) account. You can automatically have money pulled from every paycheck and put into a 401(k), which comes with major tax breaks. Sometimes your employer will also add money through what's known as a "401(k) match." The money in your 401(k) can be invested in stocks, bonds, and other securities. If you invest those funds wisely, they can grow significantly without any work from you.

Not all employers offer accounts like this, but you can still save for retirement. Individual retirement accounts (IRAs) also offer big tax breaks, and they let you invest money in money market accounts (MMAs), stocks, bonds, and more. The funds should grow with time.

Your bank might offer IRAs, and you can work with your bank to pull money out of your checking account and into this dedicated retirement account every month. You can also work with brokerage companies to set up IRAs.

The government only wants you to use these funds for retirement. As a result, there are penalties for pulling money out before the age of 59½. If you place money in these spaces, you should consider it gone until it's time for you to retire.

These retirement savings tools are complicated, and it isn't always easy to understand their rules, benefits, and risks. The company you work with should take the time to explain your options in a language you can understand. You should feel comfortable asking as many questions as you'd like to, and you should be given written materials to study so you can make smart decisions. Companies that pressure you or don't help you understand your options should be avoided.

How to get a credit card

Credit cards look like bank cards, but there's a key difference: The credit card company pays for the purchases, and you must pay it back.

There are many types of credit cards, including:

Which is right for you? The answer depends on your credit history. If you have a great credit history and a high credit score, companies are likely to make you valuable offers. You should look for a card that offers the lowest interest rate and the best benefits. All the information you need to make a decision is in the fine print of the contract you sign.

But without a credit history, you may need to take a few additional steps to secure a credit card. You might be asked to:

  • Get a cosigner. This person vouches for your creditworthiness and agrees to pay back your debt if you can't.
  • Make a deposit. Secured credit cards require a deposit before you start to borrow. You may put down $500, for example, and that is your available credit limit. Going over that limit means paying a fee.
  • Pay high interest rates. Your interest rate is the percentage of your outstanding debt you must pay if you don't pay your credit card off in full each month. A low credit score signifies risk, which comes with higher costs.
  • Accept a small balance. Your card may have a limited borrowing amount until your score rises.

Credit cards can seem like "free money," and it can be tempting to run up a big balance and worry about payments later. Only borrow what you can pay off by the due date each month. That way you'll avoid costly interest charges and establish a good credit history, which will be rewarded with a higher credit score.

Other options to consider

Just because you moved to another country doesn't mean you left your culture behind. You might live in a community filled with people who also came from your home country, and they might offer financial tools that seem familiar.

For example, some communities have rotating savings and credit associations (ROSCAs). These are informal institutions in which:

  • You make a deposit each month.
  • Each month, someone receives the total amount that everyone has deposited that month.
  • When everyone has been paid, the group restarts or disbands.

Your money is not protected by a formal institution in a plan like this, but there is an honor code among participants that can keep people honest. The group may also include only people they know, so those with dangerous backgrounds are never allowed in.

Systems like this can keep you connected with your culture and your community. But you'll need to do a little digging to find them. There is no formal roster of all ROSCAs in the United States.

It's also important to remember that these institutions won't help you build up a credit history or prove you're trustworthy. If you choose to move out of this system into American banking, you'll need to build up your credit score from scratch.

Frequently asked questions

Do I even need a Social Security number (SSN)?

Financial institutions require proof of your identity, and for American citizens, that means providing a Social Security number (SSN). It takes time, patience, and documentation to get that number. But the effort is well worth it.

Why do I need a bank account?

Your money is protected in a bank account, so you'll be less likely to lose everything in a robbery. Bank accounts can also help you boost your credit score if you avoid overdrawing your account. You can use a checking account to cover daily expenses, and you can use a savings account to help you save.

What is a credit score?

Your credit score is used by financial institutions to determine how often you keep your financial commitments. Monthly bills, loan payments, salaries, and more go into this score. Raise your score by paying your bills on time, borrowing as little as you can, and demonstrating credit trustworthiness.

What is a quick way to build my credit score?

Consider a credit card. Make small purchases and pay back the balance every month. You'll prove you keep your commitments. Also keep your credit utilization as low as you can.

Can I take out a loan even if I'm here illegally?

Some loans are hard for undocumented people to get. But others, including mortgages, are accessed by illegal immigrants every day. You need to choose the right company to work with.

Are all credit card companies the same?

No. Some have higher interest rates, some offer perks and benefits, and some don't accept alternative forms of identification. It pays to shop for the deal that is right for you.

Can I buy a house if I'm an immigrant?

Yes. Many immigrant families purchase their homes.

Why should I save for retirement?

You'll need savings to cover all of your costs when you retire, especially if you are ineligible for Social Security. The sooner you start preparing for retirement, the more comfortable and secure it will be.

How can I save for retirement?

Ask your employer about a 401(k) account. If that's not an option, talk with your bank or a broker about opening an IRA account.


Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.