The Biggest Money Mistakes People Make in the move from India to the United States
Tags: Money Mindset, Money Management, Money, Immigrants, Immigration

America is a land of opportunity and the American dream is very real. I understand, the same is very much possible anywhere on the earth but I believe it is a lot easier in a country of free thinkers. I moved to the United States almost 13 years back from India after a short 3 years stay in Japan. As much I was determined to make this country my home, I wish my younger self was educated in a few financial decisions/preparations. Recently, I came across Personal Capital (https://www.personalcapital.com/) to calculate my Networth and it questioned my last 10 years of financial decisions.

The younger me was a person of the free sprint, extremely healthy, and had no regrets or worry about his future. He loved to live by the moment and exactly believed to enjoy the present to avoid any regrets around it in his death bed. In my case, Photography was the gateway drug; I spent all my time and money in the expensive hobby collecting all new and vintage cameras. Little did he knew, it would take 12–16 years for him to get his Green card which liberates him in pursuing the photography passion as a profession. Slowly with time (during the long wait), the passion dropped and all the gears collected dust losing their value.

If I had a possibility to time travel and advice my younger me or any future Indians migrating to the United States, the following would be the rules I would recommend,

NRE/NRO Bank Account & Demat Account in India: Consolidate all your bank accounts to a single (or two) with an Institution of your choice and do yourself a favor by opening up the NRE, NRO, and a Demat account. Also, ensure a process to update the account with a US phone number as you reach the United States. And invest at a minimum of $150 every paycheck/month in Indian stocks (if you are not familiar, at least use the NIFTY 50/SENSEX 30 as reference).

Financial Education: Invest in a few good books on money management and not limited to Rich Dad Poor Dad, The Total Money Makeover, and Millionaire Teacher.

Green Card I-140/Perm Processing: Initiate the Green Card Processing, Perm/I-140 as early as possible as you start working in America. Some firms would initiate the processing after your 1 year’s stay — do not take any further delay in submitting the forms. Do not confuse the possible EB category change with any upcoming promotions; the category could be changed later but getting a priority date is key (especially for persons with their county of birth as India).

401(K) Plan Retirement Match: 401(K) Plan is a company-sponsored retirement fund with the most company’s matching 50% up to 6% of your contribution — that's free money. These are pre-tax allocation and the tax is deferred until the money is withdrawn after 65 years of age. It would help the money grow huge for the next 30–50 years being untouched. You will need to ensure the allocation is on the low-cost index fund with the couch potato allocation between US stocks, International stocks, and Short Term US Government Bonds. If possible, max out on the yearly contribution but at least up to the company’s match percentage.

IRA (Traditional/Roth): Individual Retirement Account is another retirement plan but you get to choose your brokerage firm and the exact funds. I highly recommend using the brokerage house with the low-cost index fund and use the similar couch-potato allocation but max out on each year’s contribution. You cannot go wrong with either Traditional or Roth IRA: one is taxed now vs deferred. I choose to use Traditional IRA now and plan to roll it over to Roth IRA in the later stage)

HSA (Health Savings Account): If you are healthy, I strongly recommend using the yearly high deductible health insurance plan which gives you the option to invest in the HSA. Max out of the HSA, which could literally be the medical emergency fund. Additionally, your company may as well offer a match on HSA (another free money). As the fund reaches $1000, it should go on as a variation of the couch potato allocation. Max out the HSA for at least 3 years which should bring the balance up to $21K and you wouldn't have to pay a higher insurance plan later. It is estimated that the health spends would go higher (up to $260,000) with age. The HSA would help in keeping your 401(K)/IRA undisturbed.

ESOP (Employee Stock Ownership Plan): If your company offers options to buy stock as a part of ESOP, opt to max out on the allocation. Typically, you are given the shares at a discounted price at the end of the quarterly period. You may choose to keep the stocks in the long run or even choose to sell them the very same day you are allowed to sell but do not miss out on the discounted price.

529 Educational Plan: Invest a percentage to the 529 college plan, if you plan to pursue a college or if you have kids. College cost in America is huge and do not let that burden your child. Public college could cost up to $65K and the IVY private colleges up to $260K. There is always a debate on the usefulness of expensive college education but I firmly believe, it is well worth it — provided you had planned the funding with a 529 Plan.

Additional Savings/Investments: Few more rules/tips are

Build an emergency fund of at least 3 –6 months of your expenses

Stay with roommates (if single) reducing the largest rental expense

Live below your means / Cook your own food

Get yourself a cheaper & reliable Japanese/Korean used car — not more than $6K-7K.

Do use your Credit Card wisely and pay it off, every month

Invest remaining funds on good individual stocks (Bluechip Dividend) in the United States & India

Do all of the above for the next 15 years. You will be a millionaire and you wouldn't have to even worry about getting permanent residency in any country (including the United States of America). And your future self will thank you.