(photo credit: REUTERS)
The end of this week marks a big milestone for me personally, as it makes 25 years that I am living in Israel! Rather ironic that I will be celebrating this anniversary while vacationing in the US. I like to tell people I came to Israel after I lost a bet, and the loser had to move to the Holy Land.
All joking aside, I came straight out of university and landed here with nothing other than a suitcase and some books. While it wasn’t easy at first, and it took a bit of time to land a stable job, I am proud to boast that 25 years later I have my own company, an awesome wife and five great kids who routinely make fun of my Hebrew. Despite speaking the local language with a heavy American accent, I have managed to get by and establish my roots here.
This week also marks the culmination of another incredible summer of immigration to Israel brought to us by Nefesh B’Nefesh (NBN) and the Jewish Agency. The buzz around aliya that NBN has generated is truly remarkable in scope and inspiration. Even a grizzled veteran oleh like me still gets an emotional charge when watching videos of the NBN welcome ceremonies.
In just the last month they brought nearly a thousand olim to Israel. That’s incredible. I think the summer of 1992, when I arrived, I was one of about six new immigrants! I’d like to pass along some financial tips to help the new olim make it financially in their new home. I fully understand that getting kids acclimated to a new school and learning a new language is more time sensitive than what is going on with the stock market.
That being said, if I can give a tip based on my 25 years living here and professionally working with immigrants, it’s to take care of your finances. I can’t tell you how often I have met North American olim who neglected their finances and are now paying the price.
Here are a few tips that will make your financial relocation a bit easier.
Keep saving Just because you are in a new situation doesn’t mean that you can neglect the fundamentals of personal finance.
You still need to pay yourself first. Ten percent to 15% of income needs to go into savings. Too often I hear complaints that with low Israeli salaries it’s impossible to save. Well, it is very possible if you are dedicated to building wealth for the future. If you stop saving, you are doing major damage to your long-term financial security.
I understand that for those olim fresh off the plane, the need to get settled and create a budget can take a few months. So if you miss a few months of “paying yourself first,” it’s not a big deal.
Don’t forget about your IRA To my chagrin, one of the most common issues I see when I meet with prospective clients is that they haven’t looked at their IRAs (individual retirement account) or 401ks in years. The thought process is usually that since this money is for retirement, there is no sense in worrying about the money now. Immigrants tend to forget about these accounts altogether, only to wake up in a decade or so to realize that the value of their account is the same as it was pre-aliya.
I recently had a meeting with an oleh who made this error. He said he moved to Israel about 10 years ago. He came with a couple hundred thousand dollars, which he liquidated to buy an apartment. He told me the biggest mistake he made was with his IRAs. He had one worth about $60,000, and his wife had about $40,000. He said he basically left them alone and never made any changes.
Well, 10 years later they are still worth the same amount of money.
Also, make sure that the firm you have been working with in the US will still service your account in Israel. This has become a huge issue, as many people have received letters that say they are no longer welcome to do business due to their foreign (non-US) address.
I know it’s tough, but take some time to get your financial aliya in order as well. It will go a long way to help enable you to become financially secure in the future.
Good luck and welcome to Israel! The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc., or its affiliates.
email@example.com Aaron Katsman is a licensed financial professional in Israel and the United States who helps people with US investment accounts. He is the author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing.