7 Steps to Financial Security if You’re a First Generation American

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If you’re a first-generation American, you may be the first in your family to navigate the banking system or be able to grow your wealth. The pressure is great, but there are also many opportunities.

“I’ve noticed that first-generation Americans often face unique financial hurdles,” said Kevin Shahnazari, the founder and CEO of FinlyWealth. “Many come from families where financial literacy was not taught or where cultural differences influence money management styles.”

Below are some key strategies to help first-generation Americans build financial security.

Start by building a solid banking relationship

When working with first-generation clients, Shahnazari often emphasizes the importance of having both checking and savings accounts at banks insured by the Federal Deposit Insurance Corporation (FDIC).

In his experience, some people from immigrant families may be hesitant to trust banks because of their experiences in other countries.

Shahnazari tells these customers, “Your money grows through trust – trust in safe financial institutions and trust in your own financial decisions.”

Using an FDIC-insured bank can provide security for first-generation Americans; In the event of a bank failure, your money is protected.

Building credit should be a top priority

“I often see first-generation Americans starting out with no credit history, which can make everything from renting an apartment to finding a job more difficult,” Shahnazari said.

He recommended starting with a secured credit card that minimizes risk while building a credit history.

“One of my clients, a recent college graduate whose parents never had credit cards, started out like this,” he continued. “Within a year, she qualified for a standard card and saw her credit score increase to over 700.”

Understanding and maximizing workplace benefits is critical

According to Shahnazari, not all first-generation Americans are familiar with employment benefits, which results in them not taking full advantage of these benefits in the workplace.

“I always say: ‘Your salary is just the beginning – your benefits are the cornerstone of real wealth creation.’”

He advises his clients to take full advantage of 401(k) matching, health savings accounts and education reimbursement programs.

Protection should be a cornerstone of your financial plan

“I’ve seen too many first-generation Americans forgo important insurance coverage and try to save money in the short term,” Shahnazari said. “However, proper insurance – health, life, disability and property – protects the financial foundation you build.”

He continued, “One customer initially refused to purchase renter’s insurance, but when a fire in his apartment building destroyed his belongings, he was grateful for my insistence on insurance.”

Education is vital

It’s difficult to build wealth without understanding the ins and outs of personal finance, especially when it comes to things like taxes and retirement planning.

“The U.S. tax system can be overwhelming, even for lifelong citizens,” Shahnazari said.

If you’re a first-generation American, he recommends contacting a tax professional who can break down concepts like deductions, credits and long-term tax planning strategies. He also suggests saving early and regularly for retirement.

He said, “Many [of my first-generation clients] come from cultures where family provides retirement, but in the United States, personal retirement planning is essential.”

Nischay Rawal, certified public accountant (CPA) and founder of NR CPAs and Business Advisors, LLC, also believes that education is crucial. For him, as a first-generation American, it even played a significant role.

“I worked several jobs to support my accounting degree and then earned my CPA,” Rawal said. “Continuously improving your education and skills creates opportunities. Mentorship was key; I sought advice from successful first-generation Americans and built a network that led to new clients and partnerships.”

Set clear boundaries and get creative

Rawal also noted that “balancing family responsibilities with personal financial goals can be difficult,” as many first-generation Americans feel responsible for supporting family members here and in their country of origin.

“I work with clients to create a sustainable plan that allows them to help their families while securing their financial future,” Rawal continued. “That could mean setting clear boundaries or finding creative ways to offer support without jeopardizing personal financial security.”

A truth Rawal shares with all of his first-generation clients is this: “Financial security in a new country doesn’t happen overnight, but with every informed decision you lay another foundation for success.”

Saving and investing carefully is crucial

As a teenager, Rawal started saving 10 to 15% of every salary.

He said: “Over time, small amounts became a nest egg for studying or starting a business. I invested in index funds and real estate, such as a semi-detached house where I could live and rent the other unit at the same time. The rent covered the mortgage and provided cash flow and equity.”

Although the circumstances were challenging, he said the fruits of his wise decisions were significant.

“Success is possible through education, community support and making your money work for you over time,” Rawal added. “Small amounts, compounded, lead to security and options. With the right mindset, first-generation Americans can achieve their vision of the American dream.”